Problem 23-1A Rogen Corporation manufactures a single product. The standard cost

Question

Problem 23-1A

Rogen 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 ($14.00 ÷ 1.00). It was computed from a master manufacturing overhead budget based on normal production of 5,300 direct labor hours (5,300 units) for the month. The master budget showed total variable costs of $37,100 ($7.00 per hour) and total fixed overhead costs of $37,100 ($7.00 per hour). Actual costs for October in producing 4,600 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 $7 per pound $ 7.00 Direct labor—1.00 hours at $11.65 per hour 11.65 Variable manufacturing overhead 7.00 Fixed manufacturing overhead 7.00 Total standard cost per unit $32.65

Explanation / Answer

Standard Qty' Standard Rate Standard Amt Direct Material 1.00 7.00 7.00 Direct Labor 1.00 11.65 11.65 Variable M OH 1.00 7.00 7.00 Formula Formula Variance U/F Fixed M OH 1.00 7.00 7.00 Total materials variance (Standard Cost-Actual Cost) (32200-33867) -1667 Unfavourable Total Standard Cost PU 32.65 Materials price variance (Standard Price-Actual Price)*Actual Qty (7.00-7.10)*4770 -477 Unfavourable Materials quantity variance (Standard Qty-Actual Qty)*Standard Qty (4600-4770)*7 -1190 Unfavourable Actual Units 4600 Total labor variance (Standard Cost-Actual Cost) (53590-52614) 976 Favourable Labor price variance (Standard Price-Actual Price)*Actual Qty (11.65-11.85)*4440 -888 Unfavourable Standard Qty' Standard Rate Standard Amt Labor quantity variance (Standard Qty-Actual Qty)*Standard Qty (4600-4440)*11.65 1864 Favourable Direct Material 4,600 7.00 32,200 Direct Labor 4,600 11.65 53,590 Variable M OH 4,600 7.00 32,200 Fixed M OH 4,600 7.00 32,200 Total OH Variance (Standard Cost-Actual Cost) (64400-66200) -1800 Unfavourable Total Standard Cost PU 1,50,190 Actual Qty Actual Rate Actual Amt Direct Material 4,770 7.10 33,867 Direct Labor 4,440 11.85 52,614 Variable M OH 4,440 11.02 48,942 Fixed M OH 17,258 Total Standard Cost PU 1,52,681

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