Question

Bramble Corporation manufactures a single product. The standard cost per unit of product is shown below....

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

Homework Answers

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

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