I\'m not sure where i went wrong here Rogen Corporation manufactures a single pr
ID: 2479934 • Letter: I
Question
I'm not sure where i went wrong here
Rogen 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 ($28.00 -5- 2.00). It was computed from a master manufacturing overhead budget based on normal production of 10,000 direct labor hours (5,000 units) for the month. The master budget showed total variable costs of $75,000 ($7.50 per hour) and total fixed overhead costs of $65,000 ($6.50 per hour). Actual costs for October in producing 3,400 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 all of the materials and labor variance. Compute the total overhead variance. Total overhead varianceExplanation / Answer
Total Material Variance = Material Quantity Variance + Material Rate Variance (As already calculated)
= 720 + 1200 = 1920 (Unfavourable)
Labour Price variance = Actual Hours * (Actual Rate - Standard Rate)
= 6650 * (83790/6650 - 12.20) = 2660 (Unfavourable)
Total labour Variance = Labour rate Variance + Labour Efficiency variance
= -2660 + 1830 = 830 (Unfavourable)
Total Overhead Variance = (Actual Output - Standard Output) * Budgeted Overhead cost per unit
= (3400 - 5000) * 14 = 22400(unfavourable)