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 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