Question

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A manufactured product has the following information for June.

	Standard	Actual
Direct materials	6 lbs. @ $8 per lb.		44,800	lbs. @ $8.20 per lb.
Direct labor	3 hrs. @ $17 per hr.		21,900	hrs. @ $17.60 per hr.
Overhead	3 hrs. @ $12 per hr.	$	272,900
Units manufactured			7,400

(1) Compute the standard cost per unit.
(2) Compute the total cost variance for June.

Complete this question by entering your answers in the tabs below.

Compute the standard cost per unit.

Direct materials
Direct labor
Overhead
Total

Complete this question by entering your answers in the tabs below.

Compute the total cost variance for June. (Indicate the effect of each variance by selecting for favorable, unfavorable, and no variance.)

Total cost variance

Answer 1

• Requirement 1

Direct Materials	$48	6 lbs x $ 8
Direct Labor	$51	3 hrs x $ 17
Overhead	$36	3 hrs x $ 12
Total	$135

• Requirement 2

Actual cost:
Direct Materials	$367,360	=44800*8.2
Direct Labor	$385,440	=21900*17.6
Overhead	$272,900	272900
Total Actual Cost	$1,025,700
Total Standard cost	$999,000	=7400*135
Total Cost Variance [$1025700 - 999000]	$26,700	Unfavourable = Answer