Posted: July 24th, 2016

Compute all of the materials and labor variances.

Mifflin Corporation manufactures a single product with the following standard costs:
Direct materials—3 pounds plastic at $7 per pound
Direct labor—0.50 hours at $11.00 per hour
Variable manufacturing overhead 3.00
Fixed manufacturing overhead 4.00

The predetermined manufacturing overhead rate is $14 per direct labor hour ($7 ÷ 0.50) based on normal production of 2,700 direct labor hours (5,400 units) for the month. The master budget showed variable costs of $16,200 ($6.00 per hour) and total fixed overhead costs of $21,600 ($8.00 per hour). Actual costs for October for production of 3,500 units show:
Direct materials (10,620 pounds) $ 76,995
Direct labor (1,560 hours) $17,706
Variable overhead $17,175
Fixed overhead $9,305

Quantity purchased equals quantity used so ignore raw material inventory.

(a) Compute all of the materials and labor variances.
(b) Compute the total overhead variance.

Solution Summary

Your tutorial is attached. Please click in the cells to see the computations.