The purchasing department buys the quantities of raw

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Reference no: EM13567507

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

Direct materials-1 pound plastic at $7.33 per pound		$ 7.33
Direct labor-1.00 hours at $12.00 per hour		12.00
Variable manufacturing overhead		7.50
Fixed manufacturing overhead		6.50
Total standard cost per unit		$33.33

The predetermined manufacturing overhead rate is $14 per direct labor hour ($14.00 ÷ 1.00). It was computed from a master manufacturing overhead budget based on normal production of 5,700 direct labor hours (5,700 units) for the month. The master budget showed total variable costs of $42,750 ($7.50 per hour) and total fixed overhead costs of $37,050 ($6.50 per hour). Actual costs for October in producing 4,600 units were as follows.

Direct materials (4,740 pounds)		$ 36,071
Direct labor (4,440 hours)		54,878
Variable overhead		45,593
Fixed overhead		20,817
Total manufacturing costs		$157,359

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

1. Compute the total overhead variance.

Reference no: EM13567507

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