Question

Xavier Company produces a single product. Variable manufacturing overhead is applied to products on the basis of direct labor-hours. The standard costs for one unit of product are as follows: Direct material: 6 ounces at $0.50 per ounce . . . . . . . . . . . . . . . . . . $3 Direct labor: 1.8 hours at $10 per hour . . . . . . . . . . . . . . . . . . . . . . . 18 Variable manufacturing overhead: 1.8 hours at $5 per hour . . . . . . . 9 Total standard variable cost per unit . . . . . . . . . . . . . . . . . . . . . . . . . $30 During June, 2,000 units were produced. The costs associated with June’s operations were as follows: Material purchased: 18,000 ounces at $0.60 per ounce . . . . . . . $10,800 Material used in production: 14,000 ounces . . . . . . . . . . . . . . . . . — Direct labor: 4,000 hours at $9.75 per hour . . . . . . . . . . . . . . . . . $39,000 Variable manufacturing overhead costs incurred . . . . . . . . . . . . . $20,800 Required: Compute the direct materials, direct labor, and variable manufacturing overhead variances.

Answer 1