Materials, labor, and overhead variances- four-variance method Lopez Corporation uses a standard cost system and manufactures one product. The variable costs per product follow:

Budgeted fixed costs for the month are \(\$ 4,000\), and Lopez expected to manufacture 2,000 units. Actual production, however, was only 1,800 units. Materials prices were \(5 \%\) over standard, and labor rates were \(10 \%\) over standard. Of the factory overhead expense, only \(80 \%\) was used and fixed overhead was \(\$ 100\) over the budgeted amount. The actual variable overhead cost was \(\$ 4,800\). In materials usage, \(8 \%\) more parts were used than were allowed for actual production by the standard and \(6 \%\) more labor hours were used than were allowed.
{Required:}
1. Calculate the materials and labor variances.
2. Calculate the variances for overhead by the four-variance method.

Transcribed Image Text:

Materials (4 parts) Labor (2 hours) Overhead $2 6 3 $11