Costello Corporation manufactures a single product. The standard cost per unit o
ID: 2502661 • Letter: C
Question
Costello Corporation manufactures a single product. The standard cost per unit of product is shown below.Direct materials Costello Corporation manufactures a single product. The standard cost per unit of product is shown below.
Direct materials Direct materials Costello Corporation manufactures a single product. The standard cost per unit of product is shown below. The predetermined manufacturing overhead rate is $10 per direct labor hour ($20.00 2.00). It was computed from a master manufacturing overhead budget based on normal production of 11,800 direct labor hours (5,900 units) for the month. The master budget showed total variable costs of $70,800 ($6.00 per hour) and total fixed overhead costs of $47,200 ($4.00 per hour). Actual costs for October in producing 4,000 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. (a) Compute all of the materials and labor variances. (Round answers to 0 decimal places, e.g. 125.)
Explanation / Answer
Variable overhead $574,350 divided by 273500 direct labor hours = $2.10
Actual overhead rate $2.10 minus standard overhead rate $1.60 = $0.50 rate variance per labor hour
Rate variance per hour $0.50 x hours worked 273500 = rate variance $136,750