Computing materials, labor, and overhead variances. The Burnett Corporation manufactures one product. Its standard costs under efficient operating conditions are as follows:

Instructions 1. Compute the total materials variance from the standard. Divide this variance into its two component parts, showing whether each is favorable or unfavorable.
2. Compute the total labor variance from the standard. Divide this variance into its two component parts, showing whether each is favorable or unfavorable.
3. Compute the total manufacturing overhead variance from the standard. Divide this variance into the budget variance and the volume variance. Then divide the budget variance into its two component parts.
4. Which person in the company is most likely to be responsible for each of the variance factors that you determined above?

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Material, 12 gal at 5.40 per gal Direct Labor, 1 hr at $6 per hr Manufacturing Overhead, 1 hr at $4 per hr Total Standard Costs per Unit $ 4.80 6.00 4.00 $14.80 The manufacturing overhead rate is based on a normal yearly volume of 200,000 direct labor hours. The fixed overhead costs total $240,000 per year. Production and cost figures for the month of May 19X1 are as follows: Units of Product Manufactured Raw Materials Used Direct Labor Hours Worked Cost per Gallon of Raw Materials Labor Rate per Hour Manufacturing Overhead Costs Incurred 15,000 units 182,300 gal 15,400 hr $.38 $6.20 $66,200.00