Rogen Corporation manufactures a single product. The standard cost per unit of p

Question

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

The predetermined manufacturing overhead rate is $16 per direct labor hour ($32.00 ÷ 2.00). It was computed from a master manufacturing overhead budget based on normal production of 12,000 direct labor hours (6,000 units) for the month. The master budget showed total variable costs of $84,000 ($7.00 per hour) and total fixed overhead costs of $108,000 ($9.00 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—1 pound plastic at $6 per pound $ 6.00 Direct labor—2.00 hours at $11.15 per hour 22.30 Variable manufacturing overhead 14.00 Fixed manufacturing overhead 18.00 Total standard cost per unit $60.30

Explanation / Answer

Std material Qty allowed er unit: 1 pound Std Quantity Allowed (4100*1): 4100 pounds Std price per pound: 6 Actual price per pound (26350/4250): 6.2 Actual Qty used: 4250 pounds Total material variance = Std Qty*Std price - Actual Qty*Actual price 4100 *6 - 4250 * 6.20 = 1750 U Material price variance= Actual Qty (Std price-Actual pricec) 4250 ( 6.00 -6.20 ) = 850 U Material Qty Vvraiance = Std Pprice (Std qty-Actual Qty) 6.00 ( 4100-4250) = 900 u Std labour hours per unit: 2.00 Std labuor hours: 8200 hours Actual hours allowed: 8070 hours Std rate per hour: 11.15 per hour Actual Rate per hour: (92402/8070)= 11.45 Total Labour cost= Std labour hours*Std rate - Actual labour hours*Actual rate 8200 *11.15 - 92402 = 972 U labour rate variance= Actual horus (Std rate-Actual rate) 8070 (11.15-11.45 )= $ 2422 U Labour effciency variance= Std rate (Std horuos-Actual horus) 11.15 (8200-8070) = 1449 F Total OH variance: Sstd hours*Std OH rate - Actual Total oh incurred 8200 *16 - (99710+33590)= 2100 U

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