Ranier Corporation manufactures a single product. The standard cost per unit of the product is shown below:

The predetermined manufacturing overhead rate is $7.50 per direct labour hour ($15.00 ÷ 2). This rate was calculated from a master manufacturing overhead budget based on normal production of 20,000 direct labour hours (10,000 units) for the month. The master budget showed total variable costs of $100,000 ($5.00 per hour) and total fixed costs of $50,000 ($2.50 per hour). Actual costs for October in producing 9,600 units were as follows:

The purchasing department normally buys the quantities of raw materials that are expected to be used in production each month. Raw materials inventories can therefore be ignored.
Instructions
(a) Calculate all of the materials and labour variances.
(b) Calculate the total overhead variance.
(c) Calculate the overhead budget variance and the overhead volume variance.

Transcribed Image Text:

Direct materials-1.5 kg of plastic at $8 per kilogram Direct labour-2 hours at $15 per hour Variable manufacturing overhead Fixed manufacturing overhead Total standard cost per unit $12.00 30.00 10.00 5.00 $57.00 Direct materials (10,200 kg) Direct labour (14,000 hours) Variable overhead Fixed overhead Total manufacturing costs $ 74,500 175,000 112,500 37,500 $399,500