Question
Xavier Company produces a single product. Variable manufacturing overhead is applied to products on the basis of direct labor-hours. The standard costs for one unit
Xavier Company produces a single product. Variable manufacturing overhead is applied to products on the basis of direct labor-hours. The standard costs for one unit of product are as follows:
Direct material: 6 ounces at $0.50 per ounce . . . . . . . . . . . . . . . . . . $3
Direct labor: 1.8 hours at $10 per hour . . . . . . . . . . . . . . . . . . . . . . . 18
Variable manufacturing overhead: 1.8 hours at $5 per hour . . . . . . . 9
Total standard variable cost per unit . . . . . . . . . . . . . . . . . . . . . . . . . $30
During June, 2,000 units were produced. The costs associated with June?s operations were as follows:
Material purchased: 18,000 ounces at $0.60 per ounce . . . . . . . $10,800
Material used in production: 14,000 ounces . . . . . . . . . . . . . . . . . ?
Direct labor: 4,000 hours at $9.75 per hour . . . . . . . . . . . . . . . . . $39,000
Variable manufacturing overhead costs incurred . . . . . . . . . . . . . $20,800
Required:
Compute the direct materials, direct labor, and variable manufacturing overhead variances.
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