Problem 11-1A Rogen Corporation manufactures a single product. The standard cost
ID: 2581348 • Letter: P
Question
Problem 11-1A
Rogen 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 ($15.00 ÷ 1.50). It was computed from a master manufacturing overhead budget based on normal production of 8,100 direct labor hours (5,400 units) for the month. The master budget showed total variable costs of $52,650 ($6.50 per hour) and total fixed overhead costs of $28,350 ($3.50 per hour). Actual costs for October in producing 3,200 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.)
(b)
Compute the total overhead variance.
Explanation / Answer
Total Material Variance = Actual Cost - (Standerd Qty * Standerd Price)
= $27378 - (3200*$8)
= $27378 - $25600
= $1778 U
Direct material price Variance= (AQ * AP) - (AQ * SP)
= $27378 - (3380 * $8)
= $27378 - $27040
= $338 U
Direct Material Quantity Variance = SP * (AQ - SQ)
= $8 (3380 - 3200)
= $1440 U
Total Labor Variance = Actual Cost - (Standerd Hours * Standerd Rate)
= $55930 - (3200 * $17.55)
= $55930 - $56160
= $230 F
Direct Labor Rate Variance = (AH * AR) - (AH * SR)
= $55930 - (4700*$11.70)
= $55930 - $54990
= $940 U
Direct Labor Time Variance = SR * (AH - SH)
= $11.70 * (4700 - 4800)
= $11.70 * (-100)
= $1170 F
Total Overhead Variance = Actual Overhead - (Standerd Units * Standerd Rate)
= $49900 - (3200 * ($9.75+$5.25)
= $49900 - $48000
= $1900 U