Costello Corporation manufactures a single product. The standard cost per unit o
ID: 2486273 • Letter: C
Question
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 ($14. 00 1. 00). It was computed from a master manufacturing overhead budget based on normal production of 5,100 direct labor hours (5,100 units) for the month. The master budget showed total variable costs of $38,250 ($7. 50 per hour) and total fixed overhead costs of $33,150 ($6. 50 per hour). Actual costs for October in producing 3,700 units were as follows. Direct materials (7,500 pounds) 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 variances. Compute the total overhead variance.Explanation / Answer
Material Price variance Actual cost- Actual quantity*Standard Price 55950-(7500*7.28) 1350 U Material Qunatityvariance Standard Rate*(Actual quantity-Standard qty allowed for actula units) 7.28*(7500 pounds-(2 pounts*3700 units) 7.28*(7500-7400) 728 U Total material variance 2078 Labor price varinace Actual Cost-Actual hours*Standard price 40321-(3540*11) 1381 U Labor quantity Variance Standard Rate*(Actual Hours-Standard hours allowed for actual units) 11*(3540-(1 hour*3700 units) 11*(3540-3700) -1760 1760 F Total Labor Variance Actual cost-Standard Cost 40321-(3700*11) -379 379 F Note: Labor Quantity Variance will be $1760 F is this worng as in the question it is markd wrong but it is not red underlined There could be no other answer for Labor Quantity variance Ans to double check Itotal labor variance is $379 F as price variance is $1381 U than Labor Quantity variance should be $1760 F