Please help me on this homwwork Costello Corporation manufactures a single produ
ID: 2477720 • Letter: P
Question
Please help me on this homwwork
Costello Corporation manufactures a single product. The standard cost per unit of product is shown below. The predetermined manufacturing overhead rate is $14 per direct labor hour ($7.00 + 0.50). It was computed from a master manufacturing overhead budget based on normal production of 2,600 direct labor hours (5,200 units) for the month. The master budget showed total variable costs of $14,300 ($5.50 per hour) and total fixed overhead costs of $22,100 ($8.50 per hour). Actual costs for October in producing 4,700 units were as follows. The purchasing department buys the quantities of raw materials that are expected to be used in production each month. Raw materials inventories, therefore, can be ignored. Compute the overhead controllable variance and the overhead volume variance.Explanation / Answer
Overhead controllable variance = Actual Overhead - Budgeted Allowance Based on Standard Hour allowed
Overhead controllable variance = Actual Overhead - ( Budgeted Fixed Overhead + Standard Variable overhead)
Overhead controllable variance = (119680+42550) - (16/2* 11600 + 16*5000)
Overhead controllable variance = $ 10570 Favorable
Overhead volume variance = Budgeted Allowance Based on Standard Hour allowed - Standard Overhead
Overhead volume variance = (16/2* 11600 + 16*5000) - (16*5000*2)
Overhead volume variance = 12800 Unfavorable