Posted: April 21st, 2016
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.
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