Costello Corporation manufactures a single product. The standard cost per unit o
ID: 2497159 • 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 $12 per direct labor hour ($12.00 -r 1.00). It was computed from a master manufacturing overhead budget based on normal production of 5,300 direct labor hours (5,300 units) for the month. The master budget showed total variable costs of $42,400 ($8.00 per hour) and total fixed overhead costs of $21,200 ($4.00 per hour). Actual costs for October in producing 3,900 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 variances. (Round answers to 0 decimal places, e.g. 125.)Explanation / Answer
Particulars Standard Actual Qty Rate amount Qty Rate amount Materials 3,900.00 7.45 29,055.00 4,040.00 7.59 30,664.00 Labour 3,900.00 12.0000 46,800.00 3,800.00 12.24 46,512.00 Actual output 3,900.00 Materials reqd(3900*1) 3,900.00 Labour hrs reqd(3900*1) 3,900.00 Total Material Variance = Std Cost- Actual Cost Total Material Variance = 29,055- 30,664 Total Material Variance = 1,609 U DMPV = (SP-AP)*AQ DMPV = (7.45 - 7.59)4040 DMPV = 566 U DMQV= (SQ-AQ)SP DMQV= (3900 - 4040)7.45 DMQV= 1,043 U Total Labour Variance = Std Cost- Actual Cost Total Labour Variance = 46,800 - 46,512 Total Labour Variance = 288 F DLRV= (SR-AR)AH DLRV= (12-12.24)3800 DLRV= 912 U DLEV = (SH-AH)SR DLEV = (3900-3800)12 DLEV = 1200 F