Question

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

Direct materials—1 pound plastic at $6.00 per pound		$ 6.00
Direct labor—2.5 hours at $12.10 per hour		30.25
Variable manufacturing overhead		18.75
Fixed manufacturing overhead		21.25
Total standard cost per unit		$76.25

The predetermined manufacturing overhead rate is $16.00 per direct labor hour ($40.00 ÷ 2.5). It was computed from a master manufacturing overhead budget based on normal production of 12,750 direct labor hours (5,100 units) for the month. The master budget showed total variable costs of $95,625 ($7.50 per hour) and total fixed overhead costs of $108,375 ($8.50 per hour). Actual costs for October in producing 3,600 units were as follows.

Direct materials (3,760 pounds)		$ 22,936
Direct labor (8,870 hours)		109,101
Variable overhead		103,678
Fixed overhead		42,422
Total manufacturing costs		$278,137

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		$enter a dollar amount		select an option UnfavorableNeither favorable nor unfavorableFavorable
Materials price variance		$enter a dollar amount		select an option FavorableUnfavorableNeither favorable nor unfavorable
Materials quantity variance		$enter a dollar amount		select an option FavorableNeither favorable nor unfavorableUnfavorable
Total labor variance		$enter a dollar amount		select an option UnfavorableFavorableNeither favorable nor unfavorable
Labor price variance		$enter a dollar amount		select an option UnfavorableNeither favorable nor unfavorableFavorable
Labor quantity variance		$enter a dollar amount		select an option UnfavorableFavorableNeither favorable nor unfavorable

(b)

Compute the total overhead variance.

Total overhead variance

$enter the total overhead variance in dollars

select an option FavorableNeither favorable nor unfavorableUnfavorable

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Answer 1

(a)

Compute all of the materials and labor variances.

Total materials variance		(3600*6-22936) = 1336		Unfavorable
Materials price variance		(6*3760-22936) = 376		Unfavorable
Materials quantity variance		(3600-3760)*6 = 960		Unfavorable
Total labor variance		(3600*30.25-109101) = 201		Unfavorable
Labor price variance		(12.10*8870-109101) = 1774		Unfavorable
Labor quantity variance		(3600*2.5-8870)*12.10 = 1573		Favorable

(b)

Compute the total overhead variance.

Total overhead variance

(3600*40-146100) = 2100

Unfavorable