.0000 Sprint 6:46 PM edugen.wileyplus.com Problem 23-1A Costello Corporation man
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.0000 Sprint 6:46 PM edugen.wileyplus.com Problem 23-1A Costello Corporation manufactures a single product. The standard cost per unit of product is shown below Direct materials-2 pound plastic at 8872 86 per pound Direct labor-2.00 hours $11.00 per hour 22.00 Total standard cost per unit 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 nomal production of 11,000 direct labor hours (5,500 units) for the month. The master budget showed total variable costs of $71,500 ($6.50 per hour) and total fixed overhead costs of $38,500 ($3.50 per hour). Actual costs for October in producing 3,500 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. G Your answer is partialy correct. Try again. Compute all of the materials and labor variances. (Round answers to O decimal places, e.g. 125.) Your answer is partialy correct. Try again. Compute the total overhead variance.Explanation / Answer
1. material price variance = actual quantity * price - actual quantity * standard price
= 50763 - (7180 * $6.86)
= 50763 - 49254.8
=1508.2
2. material usage variance= actual quantity * standard price - standard quantity * standard price
= 7180 * $6.86 - (3500 units * 2pounds) * $6.86
= 49254.8 - 48020
=1234.8
3. labour price variance = actual hour * actual rate - actual hour * standard rate
= $77655 - (6860 hours * $11)
= 77655 -75460
= 2195 Unfavorable
4. direct usage variance = standard hour * standard rate - actual hour * standard rate
= (11000 hour / 5500 units * 3500 units) * $11 - 6860 hour * 11
= 7000 hour * $11 - 75460
= 77000 - 75460
= 1540 favorable
5. total labour variance = 2195 Unfavorable+ (1540 favorable)
=655 unfavorable
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