Question

--/1 Question 14 View Policies Current Attempt in Progress Rogen Corporation manufactures a single product. The standard cost per unit of product is shown below. Direct materials - 1 pound plastic at $8.00 per pound Direct labor-1.5 hours at $11.90 per hour Variable manufacturing overhead Fixed manufacturing overhead Total standard cost per unit $8.00 17.85 9.75 11.25 $46.85 The predetermined manufacturing overhead rate is $14.00 per direct labor hour ($21.00 = 1.5). It was computed from a master manufacturing overhead budget based on normal production of 8,250 direct labor hours (5,500 units) for the month. The master budget showed total variable costs of $53.625 ($6.50 per hour) and total fixed overhead costs of $61.875 ($7.50 per hour). Actual costs for October in producing 4,200 units were as follows. Direct materials (4.380 pounds) Direct labor (6,190 hours) Variable overhead Fixed overhead Total manufacturing costs $ 35,478 75,518 67,030 23,170 $201.196 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.

Answer 1

	(a).
		Total Material Variance	=Actual Material Cost - Standard Material Cost
			= 35,478 - ( 8 X 4,200)
			=1,878	Adverse
		Material Price variance	= ( Actual Price - Standard Price ) X Actual Quantity
			=( 8.1 - 8) X 4,380
			=438	Adverse
		Material Quantity Variance	= ( Actual Quantity - Standard Quantity ) X Standard Price
			= ( 4,380 - 4,200) X 8
			=1,440	Adverse
		Total Labour Variance	= Actual Labour Cost - Standard Labour Cost
			= 75,518 - ( 4,200 X 1.5 X 11.90)
			=75,518 - 74,970
			=548	Adverse
		Labour Price variance	= ( Actual Price - Standard Price ) X Actual Hours
			= ( 12.20 - 11.90) X 6,190
			= 1,857	Adverse
		Labour Quantity Variance	= ( Actual Quantity - Standard Quantity ) X Standard Price
			= (( 6,190 - (4,200 X 1.5)) X 11.90
			= - 1,309	favorable
	(b).	Total Overhead Variance	= Actual Overhead - Standard Overhead
			= ( 67,030 + 23,170) - (( 4,200 X 9.75) + ( 4,200 X 1.5 X 7.5))
			= 90,200 - ( 40,950 + 47,250)
			= 90,200 - 88,200
			=2,000	Adverse