Mifflin Corporation manufactures a single product. The standard cost per unit of product is shown below.
Direct materials—1 pound plastic at $7 per pound |
$ 7.00 |
|
Direct labor—1.50 hours at $12.00 per hour |
18.00 |
|
Variable manufacturing overhead |
11.25 |
|
Fixed manufacturing overhead |
3.75 |
|
Total standard cost per unit |
$40.00 |
The predetermined manufacturing overhead rate is $10 per direct labor hour
($15 ÷ 1.50). It was computed from a master manufacturing overhead
budget based on normal production of 7,500 direct labor hours
(5,000 units) for the month. The master budget showed total variable costs
of $56,250 ($7.50 per hour) and total fixed overhead costs of
$18,750 ($2.50 per hour). Actual costs for October in producing 4,900 units
were as follows.
Direct materials (5,100 pounds) |
$ 37,230 |
|
Direct labor (7,000 hours) |
87,500 |
|
Variable overhead |
56,170 |
|
Fixed overhead |
19,680 |
|
Total manufacturing costs |
$200,580 |
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.
(b) Compute the total overhead variance.
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