Reference no: EM131814421

Question - Loper Corporation manufactures a single product. The standard cost per unit of product is as follows:

Direct materials-2 pounds of plastic at $5 per pound $10

Direct labor-2 hours at $12 per hour 24

Variable manufacturing overhead 12

Fixed manufacturing overhead 6

Total standard cost per unit 52

The master manufacturing overhead budget for the month based on normal productive capacity of 15,000 direct labor hours (7,500 units) shows total variable costs of $90,000 ($6 per labor hour) and total fixed costs of $45,000 ($3 per labor hour). Normal productive capacity is 15,000 direct labor hours. Overhead is applied on the basis of direct labor hours. Actual costs for November in producing 7,400 units were as follows:

Direct materials (15,000 pounds) $73,500

Direct labor (14,900 hours) 181,780

Variable overhead 88,990

Fixed overhead 44,000

Total Manufacturing costs = $388,270

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

Instruction:

a) Compare all of the materials and labor variances.

b) Compute the total overhead variance.