48. (Calculation of four variances) Candy’s Ceramics utilizes a standard cost system.

Data for October are presented below:

Standard Cost per Unit

(1 Unit Takes 1 Labor Hour)

Direct material $ 9.00 Direct labor 15.00 Variable overhead 8.00 Fixed overhead 16.00 Total $48.00 The fixed overhead charge is based on an expected monthly capacity of 3,000 units, but due to a fire on the production floor, the company only produced 1,900 units. Actual variable overhead was $16,000 and actual fixed overhead was $44,000. The company recorded 2,000 direct labor hours for the month.

a. Compute and compare the actual overhead cost per unit with the expected overhead cost per unit.

b. Calculate overhead variances using the four-variance method.