Question
Ranier Corporation manufactures a single product.The standard cost per unit of the product is shown below. Direct materials 2.0 kilogram of plastic at $8.00 per
Ranier Corporation manufactures a single product.The standard cost per unit of the product is shown below. Direct materials 2.0 kilogram of plastic at $8.00 per kilogram = $16.00 Direct labour 1.5 hours at $15.00 per hour = 22.50 Variable MOH 2 hours at $5.00 per hour = 10.00 Fixed MOH 2 hours at $2.50 per hour = 5.00 Total standard cost per unit $53.50 The predetermined manufacturing overhead rate is $7.50 per direct labour hour ($15.00/2.0 hours). The rate was calculated from a master manufacturing overhead budget based on normal production of 20,000 direct labor hours, or 10,000 units for the month. The master budget showed total variable costs of $100,000 and total fixed costs of $50,000. Actual costs in October in producing 9,900 units were as follows: Direct materials 10,300 kilograms $7.33 per kilogram = $75,500 Direct labor 14,000 hours at $12.50 per hour = $175,000 Variable MOH $112,500 Fixed MOH $37,000 Total manufacturing costs $400,000 The purchasing department normally buys the quantities of raw materials that are expected to be used in production each month. Raw materials inventories can therefore be ignored.
(a) Calculate all of the materials and labor variances.
(b) Calculate the total overhead variance.
(c) Calculate the overhead budget variance and the overhead volume variance.
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