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Calculate Material, Labor, and Overhead variances.
The standard .5-liter can of solution calls for .75 liters of material and 4 hours of labor. The Standard cost per liter of material is $2.50. The standard cost per hour of labor is $13.00. Overhead is applied at the rate of $15.375 per can. Expected production is 8,000 cans with fixed overhead per year of $35,000 and variable Overhead at $11 per unit (a .5-liter can).
During 2015, 7,800 cans were produced; 13,000 liters of material were purchased at a cost of $60,000; 10,100 liters of material were used in production. The cost of direct labor incurred in 2015 was $376,250, based on an average actual wage of $11 per hour. Actual overhead was $125,000.
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