Question
BL Manufacturing Inc. makes copper mugs. The company has the following standards: Direct materials (clay)..............................1.3 kg per bottle, at a cost of $0.40 per kg
BL Manufacturing Inc. makes copper mugs. The company has the following standards:
Direct materials (clay)..............................1.3 kg per bottle, at a cost of $0.40 per kg
Direct labour.............................................1/5 hour per bottle, at a cost of $14.80 per hour
Static budget variable overhead...............$70,500
Static budget fixed overhead.....................$30,500
Static budget direct labour hours...............10,000
Static budget number of bottles..................52,000
BL Manufacturing Inc. allocates manufacturing overhead to production based on standard direct labour hours. Last month the company reported the following actual results for the production of 69,000 bottles:
Direct materials..........................................1.5 kg per bottle, at a cost of $0.70 per kg
Direct labour.............................................14 hour per bottle, at a cost of $12.90 per hour
Actual variable overhead...........................$104,600
Actual fixed overhead..............................$28,700
1. Calculate the total manufacturing overhead variance. What does this tell management?
2. Calculate the overhead flexible budget variance. What does this tell management? 3. Calculate the production volume variance. What does this tell management?
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