The following information was taken from the annual manufacturing overhead cost

Question

The following information was taken from the annual manufacturing overhead cost budget of Fergie Manufacturing. Variable manufacturing overhead costs $69,300 Fixed manufacturing overhead costs $41,580 Normal production level in labor hours 23,100 Normal production level in units 5,775 Standard labor hours per unit 4
During the year, 5,600 units were produced, 18,340 hours were worked, and the actual manufacturing overhead was $113,400. Actual fixed manufacturing overhead costs equaled budgeted fixed manufacturing overhead costs. Overhead is applied on the basis of direct labor hours. Fergie's total overhead rate is
A)1.80 B)3.00 C)4.80 D)4.90

Monster Company produces a product requiring 3 direct labor hours at $20.00 per hour. During January, 2,000 products are produced using 6,300 direct labor hours. Monster's actual payroll during January was $122,850. What is the labor quantity variance?   
A)$2,850 U B)$6,000 F C)$3,150 F D)$6,000 U

Clark Manufacturing manufactures a product with a standard direct labor cost of two hours at $12.00 per hour. During July, 2,000 units were produced using 4,200 hours at $12.20 per hour. The labor price variance was


$840 U.
$3,240 U
$3,240 F.
$2,400 U. The following information was taken from the annual manufacturing overhead cost budget of Fergie Manufacturing. Variable manufacturing overhead costs $69,300 Fixed manufacturing overhead costs $41,580 Normal production level in labor hours 23,100 Normal production level in units 5,775 Standard labor hours per unit 4
During the year, 5,600 units were produced, 18,340 hours were worked, and the actual manufacturing overhead was $113,400. Actual fixed manufacturing overhead costs equaled budgeted fixed manufacturing overhead costs. Overhead is applied on the basis of direct labor hours. Fergie's total overhead rate is
A)1.80 B)3.00 C)4.80 D)4.90

Monster Company produces a product requiring 3 direct labor hours at $20.00 per hour. During January, 2,000 products are produced using 6,300 direct labor hours. Monster's actual payroll during January was $122,850. What is the labor quantity variance?   
A)$2,850 U B)$6,000 F C)$3,150 F D)$6,000 U

Clark Manufacturing manufactures a product with a standard direct labor cost of two hours at $12.00 per hour. During July, 2,000 units were produced using 4,200 hours at $12.20 per hour. The labor price variance was
$840 U.
$3,240 U
$3,240 F.
$2,400 U.

Explanation / Answer

Hi,

Please find the answer as follows:

Part A:

Total Overhead Rate = (Fixed Overhead + Variable Overhead)/Total Direct Labor Hours = (69300 + 41580)/(5775*4) = 4.8 per hour

Option C (4.8) is correct.

Part B:

Labor Quantity Variance = Standard Rate*(Actual Hours - Standard Hours) = 20*(6300 - 3*2000) = 6000 (Unfavorable)

Option D (6000 U) is correct.

Part C:

Labor Price Variance = Actual Hours *(Actual Rate - Standard Rate) = 4200*(12.2 - 12) = 840 (Unfavorable)

Option A (840 U) is the correct answer.

Thanks.

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