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Item 7
Item 7 Part 1 of 3 10 points
Required information
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A manufactured product has the following information for
June.
| Standard | Actual | |||
| Direct materials | 7 lbs. @ $8 per lb. | 60,100 | lbs. @ $8.20 per lb. | |
| Direct labor | 2 hrs. @ $15 per hr. | 16,800 | hrs. @ $15.50 per hr. | |
| Overhead | 2 hrs. @ $12 per hr. | $ | 209,800 | |
| Units manufactured | 8,500 | |||
(1) Compute the standard cost per unit.
(2) Compute the total cost variance for June.
Answer :-
1. Computation of the standard cost per unit :-
Direct Materials = ( 7 lbs * $8 per lb) = $56per unit
Direct Labor = ( 2hrs * $15 per hr) = $30 per unit
Overhead = ( 2hrs * $12 per hr) = $24 per unit
Total Standard cost per unit = $56 + $30 + $24 = $110 per unit
2. Computation of the total cost variance for June :-
Total Cost Variance = Actual Cost - Standard Cost
Total Cost Variance = [8,500*(7*$8.20)+(2*15.50)+$209,800]-[8,500*110]
Total Cost Variance = $961,200 - $935,000
Total Cost Variance = $26,200 Unfavorable
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