Reference no: EM132773535

Ranier Corporation manufactures a single product. The standard cost per unit of the product is shown below.

Direct materials 2.0 kilogram of plastic at $8.00 per kilogram = $16.00

Direct labour 1.5 hours at $15.00 per hour = 22.50

Variable MOH 2 hours at $5.00 per hour = 10.00

Fixed MOH 2 hours at $2.50 per hour = 5.00

Total standard cost per unit $53.50

The predetermined manufacturing overhead rate is $7.50 per direct labour hour ($15.00/2.0 hours). The rate was calculated from a master manufacturing overhead budget based on normal production of 20,000 direct labor hours, or 10,000 units for the month. The master budget showed total variable costs of $100,000 and total fixed costs of $50,000.

Actual costs in October in producing 9,900 units were as follows:

Direct materials 10,300 kilograms $7.33 per kilogram = $75,500

Direct labor 14,000 hours at $12.50 per hour = $175,000

Variable MOH $112,500 Fixed MOH $37,000

Total manufacturing costs $400,000

The purchasing department normally buys the quantities of raw materials that are expected to be used in production each month. Raw materials inventories can therefore be ignored.

Problem (a) Calculate all of the materials and labor variances.

Problem (b) Calculate the total overhead variance.

Problem (c) Calculate the overhead budget variance and the overhead volume variance.