Solution-Calculate both variable manufacturing overhead

Calculate both variable manufacturing overhead variances

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Question - Lancaster Inc produces portable radios. It requires 4 units of Part AC3 in order to manufacture the radio. The standard unit cost of the Part AC3 is set at $3.75. The manager of Lancaster Inc also sets a standard direct labor requirement for the production of the radios at 2 hours per unit and sets a standard direct labor hourly rate at $11. During the month of May, 18,000 units of Part AC3 was purchased for a total of $63,000 and 2500 units of radios were manufactured using 10,900 units of Part AC3. In order to manufacture the 2,500 units of radios, the direct labors worked for a total of 5,000 hours and the company paid a total of $58,000 to the direct labors. The selling price per unit of Radio was set at $98. The Variable manufacturing overhead is applied using direct labor hours.

The variable MOH standard rate was set at $6 per direct labor hours. Actual variable MOH for the month of May was $16,000.

Required -

a. Calculate both material related variances and comment on your answer. (Show workings clearly)

b. Calculate both labor variances and comment on your answer. (Show workings clearly)

c. Calculate both variable manufacturing overhead variances and comment on your answer. (Show workings clearly)

Reference no: EM132942847

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Calculate both variable manufacturing overhead variances

Reference no: EM132942847

Reference no: EM132942847

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