Compute all material and labor variances correctly Rogen Corporation manufactures a single product. The standard cost per unit of product is shown below. $7.00 11.65 Direct materials-1 pound plastic at $7.00 per pound Direct labor-1.0 hours at $11.65 per hour Variable manufacturing overhead Fixed manufacturing overhead 7.00 7.00 Total standard cost per unit $32.65 The predetermined manufacturing overhead rate is $14.00 per direct labor hour ($14.00 1.0). It was computed from a master manufacturing overhead budget based on normal production of 5.300 direct labor hours (5,300 units) for the month The master budget showed total variable costs of $37.100 ($7.00 per hour) and total fixed overhead costs of $37,100 ($7.00 per hour). Actual costs for October in producing 4.600 units were as follows. Direct materials (4.770 pounds) Direct labor (4,440 hours) Variable overhead Fixed overhead Total manufacturing costs $33.867 52.614 48.942 17,258 $152.681 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.
Compute all material and labor variances correctly Rogen Corporation manufactures a single product. The standard cost per unit of product is shown below. $7.00 11.65 Direct materials-1 pound plastic at $7.00 per pound Direct labor-1.0 hours at $11.65 per hour Variable manufacturing overhead Fixed manufacturing overhead 7.00 7.00 Total standard cost per unit $32.65 The predetermined manufacturing overhead rate is $14.00 per direct labor hour ($14.00 1.0). It was computed from a master manufacturing overhead budget based on normal production of 5.300 direct labor hours (5,300 units) for the month The master budget showed total variable costs of $37.100 ($7.00 per hour) and total fixed overhead costs of $37,100 ($7.00 per hour). Actual costs for October in producing 4.600 units were as follows. Direct materials (4.770 pounds) Direct labor (4,440 hours) Variable overhead Fixed overhead Total manufacturing costs $33.867 52.614 48.942 17,258 $152.681 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.
Managerial Accounting
15th Edition
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:Carl Warren, Ph.d. Cma William B. Tayler
Chapter9: Evaluating Variances From Standard Costs
Section: Chapter Questions
Problem 3PB: Direct materials, direct labor, and factory overhead cost variance analysis Road Gripper Tire Co....
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Variance Analysis
In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.
Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
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