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Compute the direct materials cost variance

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Reference no: EM131539818

Question: Carlsbad Company has set the following standard costs per unit for the product it manufactures.

Direct materials (40 oz. @ $0.75 per oz.) . . . . . . . . $ 30.00

Direct labor (2 hr. @ $20 per hr.) . . . . . . . . . . . . . 40.00

Overhead (2 hr. @ $53.50 per hr.) . . . . . . . . . . . . 107.00

Total standard cost . . . . . . . . . . . . . . . . . . . . . . . . . $177.00

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The predetermined overhead rate is based on a planned operating volume of 60% of the productive capacity of 3,000 units per month. The following flexible budget information is available.

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During March, the company operated at 70% of capacity and produced 2,100 units, incurring the following actual costs.

Required: 1. Compute the direct materials cost variance, including its price and quantity variances.

2. Compute the direct labor variance, including its rate and efficiency variances.

3. Compute these variances: (a) variable overhead spending and efficiency, (b) fixed overhead spending and volume, and (c) total overhead controllable.

4. Prepare a detailed overhead variance report that shows the variances for individual items of overhead.

Reference no: EM131539818

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