Question
Rudd Clothiers is a small company that manufactures tall-mens suits. The company has used a standard cost accounting system. In May 2020, 11,250 suits were
Rudd Clothiers is a small company that manufactures tall-mens suits. The company has used a standard cost accounting system. In May 2020, 11,250 suits were produced. The following standard and actual cost data applied to the month of May when normal capacity was 14,000 direct labor hours. All materials purchased were used.
Standard (per unit)
Cost Element Standard (per unit) Direct materials 8 yards at $4.40 per yard $375,575 for 90,500 yards ($4.15 per yard)
Direct labor 1.2 hours at $13.40 per hour $200,925 for 14,250 hours ($14.10 per hour)
Overhead 1.2 hours at $6.10 per hour (fixed $3.50; variable $2.60)
Actual
$375,575 for 90,500 yards ($4.15 per yard)
$200,925 for 14,250 hours ($14.10 per hour)
$49,000 fixed overhead $37,000 variable overhead
Overhead is applied on the basis of direct labor hours. At normal capacity, budgeted fixed overhead costs were $49,000, and budgeted variable overhead was $36,400.
Compute the total overhead variance.
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