Question
Vaughn Corporation manufactures a single product. The standard cost per unit of product is shown below. Direct materials-1 pound plastic at $8.00 per pound
Vaughn Corporation manufactures a single product. The standard cost per unit of product is shown below. Direct materials-1 pound plastic at $8.00 per pound $ 8.00 Direct labor-1.50 hours at $11.90 per hour 17.85 9.75 Variable manufacturing overhead Fixed manufacturing overhead Total standard cost per unit 11.25 $46.85 The predetermined manufacturing overhead rate is $14 per direct labor hour ($21.00 1.50). It was computed from a master manufacturing overhead budget based on normal production of 8,250 direct labor hours (5,500 units) for the month. The master budget showed total variable costs of $53,625 ($6.50 per hour) and total fixed overhead costs of $61,875 ($7.50 per hour). Actual costs for October in producing 4,200 units were as follows. Direct materials (4,380 pounds) $ 35,478 Direct labor (6,190 hours) 75,518 Variable overhead 67,030 Fixed overhead 23,170 Total manufacturing costs $201,196 The purchasing department buys the quantities of raw materials that are expected to be used in production each month. Raw materials inventories, therefore, can be ignored. (a) Compute all of the materials and labor variances.
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