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Question 3: Gonzo Corp. makes magic kits. Most of the indirect costs used to make these kits are associated with the workers putting together the
Question 3: Gonzo Corp. makes magic kits. Most of the indirect costs used to make these kits are associated with the workers putting together the kits. This means that Gonzo Corp. allocates variable and fixed manufacturing overhead on the basis of direct labor hours. On January 1t, Gonzo Corp. planned on making 6,400 kits for the quarter. They believed it would take 3,520 machine hours and 7,040 direct labor hours to make the magic kits. They believed their total manufacturing overhead would be $24,640, with $17,248 coming from variable manufacturing overhead. On April 1st, Gonzo Corp. found that for the 1t quarter of the year they had made 6,440 kits and that on average, each kit took .5 machine hours and 1.15 direct labor hours to make. Their manufacturing overhead ended up being $25,711, with $7,196 coming from fixed manufacturing overhead. Using this information please conduct a 4-variance analysis for manufacturing overhead
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