Question
23-7A Costello Corporation manufactures a single product. The standard cost per unit of product is shown below. Direct materials1pound plastic at $6.50per pound $6.50 Direct
Costello Corporation manufactures a single product. The standard cost per unit of product is shown below.
Direct materials1pound plastic at $6.50per pound | $6.50 |
Direct labor1.00hours at $12.00per hour | 12.00 |
Variable manufacturing overhead | 6.00 |
Fixed manufacturing overhead | 8.00 |
Total standard cost per unit | $32.50 |
The predetermined manufacturing overhead rate is $14per direct labor hour ($14.001.00). It was computed from a master manufacturing overhead budget based on normal production of5,100direct labor hours (5,100units) for the month. The master budget showed total variable costs of $30,600($6.00per hour) and total fixed overhead costs of $40,800($8.00per hour). Actual costs for October in producing4,400units were as follows.
Direct materials (4,540pounds) | $30,736 |
Direct labor (4,290hours) | 52,424 |
Variable overhead | 44,968 |
Fixed overhead | 18,692 |
Total manufacturing costs | $146,820 |
The purchasing department buys the quantities of raw materials that are expected to be used in production each month. Raw materials inventories, therefore, can be ignored.
Compute the overhead controllable variance and the overhead volume variance.
Overhead controllable variance | $ | FavorableUnfavorableNeither favorable nor unfavorable |
Overhead volume variance | $ | UnfavorableFavorableNeither favorable nor unfavorable |
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started