Reference no: EM131793768

Problem - Kudos Company has set the following standard costs per unit for the product it manufactures.

Direct materials (10 lbs @ $3 per lb.) $30.00

Direct labor (4 hrs @ $ per hr.) 24.00

Overhead (4 hrs @ $2.50 per hr.) 10.00

Total standard cost $64.00

The predetermined overhead rate is based on a planned operating volume of 80% of the productive capacity of 10,000 units per month. The following flexible budget information is available:

Production in units 7,000 8,000 9,000

Standard direct labor hours 28,000 32,000 36,000

Budgeted overhead

Variable overhead costs

Indirect materials $8,750 $10,000 $11,250

Indirect labor 14,000 16,000 18,000

Power 3,500 4,000 4,500

Maintenance 1,750 2,000 2,250

Total variable costs 28,000 32,000 36,000

Fixed overhead costs

Rent of factory building 12,000 12,000 12,000

Depreciation - machinery 20,000 20,000 20,000

Supervisory salaries 16,000 16,000 16,000

Total fixed costs 48,000 48,000 48,000

Total overhead costs $76,000 $80,000 $84,000

During May, the company operated at 90% of capactiy and produced 9,000 units, incurring the following actual costs

Direct materials (92,000 lbs @ $2.95 per lb) $271,400

Direct labor (37,600 hrs @ $6.05 per hr) 227,480

Overhead costs

Indirect materials $10,000

Indirect labor 16,000

Power 4,500

Maintenance 3,000

Rent of factory building 12,000

Depreciation - machinery 19,200

Supervisory salaries 17,000 81,700

Total costs $580,580

Required - Prepare a detailed overhead variance report that shows the variances for indivdiual items of overhead.