PLEASE HELP! Costello Corporation manufactures a single product. The standard co

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PLEASE HELP!

Costello Corporation manufactures a single product. The standard cost per unit of product is shown below.

The predetermined manufacturing overhead rate is $14 per direct labor hour ($28.00 ÷ 2.00). It was computed from a master manufacturing overhead budget based on normal production of 11,200 direct labor hours (5,600 units) for the month. The master budget showed total variable costs of $67,200 ($6.00 per hour) and total fixed overhead costs of $89,600 ($8.00 per hour). Actual costs for October in producing 4,100 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.

Direct materials—2 pound plastic at $7.97 per pound $ 15.94 Direct labor—2.00 hours at $12.00 per hour 24.00 Variable manufacturing overhead 12.00 Fixed manufacturing overhead 16.00 Total standard cost per unit $67.94

Explanation / Answer

Total material variance = (AQ x AP) – (SQ x SP)
=67,721-(4100*2*7.97)
=67,721-65,354=$2,367(U)

Direct material price Variance=(AQ x AP) – (AQ x SP)
=AQ(Ap-SP)
=8340*[(67721/8340)-7.97]
=$1,251.2(U)

Direct material quantity Variance= (AQ x SP) – (SQ x SP)
=SP(AQ-SQ)
=7.97*(8340-8200)
=$1,115.8(U)

Total labor variance=(AH x AR) – (SH x SR)
=98207-(4100*2*12)
=$193(F)

Labor price variance=(AH x AR) – (AH x SR)
=AH(AR-SR)
=8030*[(98207/8030)-12]
=$1,847(U)

Labor quantity variance=(AH x SR) – (SH x SR)
=SR(AH-SH)
=12-(8030-8200)
=$2,040(F)

b)
Variable overhead=(4100*12)-81,850=$32,650(U)
Fixed overhead=89,600-35160= $54,440(F)

Total overhead=$21,790(f)

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