Rondello Corporation manufactures a single product. The standard cost per unit of product is shown below.
| Direct materials-2 pound plastic at $8 per pound |
|
$ 16.00 |
| Direct labor-0.50 hours at $11.00 per hour |
|
5.50 |
| Variable manufacturing overhead |
|
3.50 |
| Fixed manufacturing overhead |
|
1.50 |
| Total standard cost per unit |
|
$26.50 |
The predetermined manufacturing overhead rate is $10 per direct labor hour ($5 ÷ 0.50). It was computed from a master manufacturing overhead budget based on normal production of 2,800 direct labor hours (5,600 units) for the month. The master budget showed total variable costs of $19,600 ($7.00 per hour) and total fixed overhead costs of $8,400 ($3.00 per hour). Actual costs for October in producing 4,600 units were as follows.
| Direct materials (9,310 pounds) |
|
$ 75,690 |
| Direct labor (2,160 hours) |
|
24,624 |
| Variable overhead |
|
17,204 |
| Fixed overhead |
|
8,086 |
| Total manufacturing costs |
|
$125,604 |
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.
| Total materials variance |
|
$ |
|
UnfavorableFavorableNeither favorable nor unfavorable |
| Materials price variance |
|
$ |
|
UnfavorableNeither favorable nor unfavorableFavorable |
| Materials quantity variance |
|
$ |
|
Neither favorable nor unfavorableUnfavorableFavorable |
| Total labor variance |
|
$ |
|
Neither favorable nor unfavorableFavorableUnfavorable |
| Labor price variance |
|
$ |
|
Neither favorable nor unfavorableUnfavorableFavorable |
| Labor quantity variance |
|
$ |
|
Neither favorable nor unfavorableUnfavorableFavorable |
(b) Compute the total overhead variance.
| Total overhead variance |
|
$ |
|
FavorableNeither favorable nor unfavorableUnfavorable |