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BatCo makes metal baseball bats. Each bat requires 2.00 kg of aluminum at $24 per kg and 0.25 direct labor hours at $18 per hour. Overhead is assigned at the rate of $36 per direct labor hour.

Assume the actual cost to manufacture one metal bat is $67.50. Compute the cost variance and classify it as favorable or unfavorable.

Answer 1

Particulars	Quantity per unit	Cost per unit	Standard cost per unit	Actual Cost per unit	Favorable / Unfavorable
Direct Materials	2.00 Kg	$24.00 per kg	$48.00
Direct Labor	0.25 Hours	$18.00 per hour	$4.50
Overhead	0.25 Hours	$36.00 per hour	$9.00
TOTAL			$61.50	$67.50	$6.00 Unfavorable

Here, the Standard cost per unit ($61.50) is less than the Actual cost per unit, therefore, the cost variance would be $6.00 Unfavorable ($67.50 - $61.50)