Question

Bramble 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—1.5 hours at $11.70 per hour		17.55
Variable manufacturing overhead		9.75
Fixed manufacturing overhead		5.25
Total standard cost per unit		$40.55

The predetermined manufacturing overhead rate is $10.00 per direct labor hour ($15.00 ÷ 1.5). It was computed from a master manufacturing overhead budget based on normal production of 8,100 direct labor hours (5,400 units) for the month. The master budget showed total variable costs of $52,650 ($6.50 per hour) and total fixed overhead costs of $28,350 ($3.50 per hour). Actual costs for October in producing 3,200 units were as follows.

Direct materials (3,380 pounds)		$ 27,378
Direct labor (4,700 hours)		55,930
Variable overhead		35,518
Fixed overhead		14,382
Total manufacturing costs		$133,208

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.

Total materials variance		$		Neither favorable nor unfavorableUnfavorableFavorable
Materials price variance		$		UnfavorableNeither favorable nor unfavorableFavorable
Materials quantity variance		$		Neither favorable nor unfavorableUnfavorableFavorable
Total labor variance		$		UnfavorableNeither favorable nor unfavorableFavorable
Labor price variance		$		FavorableNeither favorable nor unfavorableUnfavorable
Labor quantity variance		$		UnfavorableNeither favorable nor unfavorableFavorable

(b)

Compute the total overhead variance.

Total overhead variance

$

UnfavorableFavorableNeither favorable nor unfavorable

Answer 1

(a)

Compute all of the materials and labor variances.

Total materials variance		(3200*8-27378) = 1778		Unfavorable
Materials price variance		(8*3380-27378) = 338		Unfavorable
Materials quantity variance		(3200-3380)*8 = 1440		Unfavorable
Total labor variance		(3200*17.55-55930) = 230		Favorable
Labor price variance		(11.70*4700-55930) = 940		Unfavorable
Labor quantity variance		(3200*1.5-4700)*11.70 = 1170		Favorable

(b)

Compute the total overhead variance.

Total overhead variance

(3200*1.5*10-49900) = 1900

Unfavorable