Question
Hillbilly Inc. manufactures beautiful handmade rocking chairs with the following standard costs: Direct Materials 30 bd ft. @ $0.70 per bd. ft.........$21 Direct labor 6
Hillbilly Inc. manufactures beautiful handmade rocking chairs with the following standard costs:
Direct Materials 30 bd ft. @ $0.70 per bd. ft.........$21
Direct labor 6 hours @ $5.00 per hour..................30
Factory overhead - applied at 2/3 of labor costs....20
Total standard cost per unit of output......................71
Standards are based on normal monthly production of 3600 direct labor hours for 600 units of output. The following information pertains to October activities:
Units produced in October..........................700 units
Direct materials purchased 22,500 bd. ft. @ .67 per bd. ft......$15,075
Direct materials used.........21,500
Direct labor 4100 hours @ $4.90 per hour...........20,090
Actual factory overhead..........$15,250
Prepare the following schedules for October, indicating whether each variance is favorable or unfavorable.
1. Labor rate variance
2. Labor efficiency variance
3. Material price variance
4. Material quantity variance
5. Total manufacturing overhead variance
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