The purchasing department buys the quantities of raw

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Reference no: EM13571188

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

Direct materials-3 pound plastic at $7.04 per pound		$ 21.12
Direct labor-1.50 hours at $11.00 per hour		16.50
Variable manufacturing overhead		8.25
Fixed manufacturing overhead		6.75
Total standard cost per unit		$52.62

The predetermined manufacturing overhead rate is $10 per direct labor hour ($15.00 ÷ 1.50). It was computed from a master manufacturing overhead budget based on normal production of 8,400 direct labor hours (5,600 units) for the month. The master budget showed total variable costs of $46,200 ($5.50 per hour) and total fixed overhead costs of $37,800 ($4.50 per hour). Actual costs for October in producing 3,900 units were as follows.

Direct materials (11,810 pounds)		$ 84,914
Direct labor (5,700 hours)		64,695
Variable overhead		43,990
Fixed overhead		16,520
Total manufacturing costs		$210,119

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. (Round answers to 0 decimal places, e.g. 125.)

Total materials variance	$	Unfavorable/Favorable/Neither favorable nor unfavorable
Materials price variance	$	Neither favorable nor unfavorable/Unfavorable/Favorable
Materials quantity variance	$	Neither favorable nor unfavorable/Unfavorable/Favorable
Total labor variance	$	Unfavorable/Favorable/Neither favorable nor unfavorable
Labor price variance	$	Neither favorable nor unfavorable/Unfavorable/Favorable
Labor quantity variance	$	Favorable/Unfavorable/Neither favorable nor unfavorable

(b) Compute the total overhead variance.

Total overhead variance

Unfavorable/Favorable/Neither favorable nor unfavorable

Reference no: EM13571188

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