The purchasing department buys the quantities of raw

Assignment Help Accounting Basics

Reference no: EM13572541

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

Direct materials-2 pound plastic at $8 per pound		$ 16.00
Direct labor-0.50 hours at $11.00 per hour		5.50
Variable manufacturing overhead		3.50
Fixed manufacturing overhead		1.50
Total standard cost per unit		$26.50

The predetermined manufacturing overhead rate is $10 per direct labor hour ($5 ÷ 0.50). It was computed from a master manufacturing overhead budget based on normal production of 2,800 direct labor hours (5,600 units) for the month. The master budget showed total variable costs of $19,600 ($7.00 per hour) and total fixed overhead costs of $8,400 ($3.00 per hour). Actual costs for October in producing 4,600 units were as follows.

Direct materials (9,310 pounds)		$ 75,690
Direct labor (2,160 hours)		24,624
Variable overhead		17,204
Fixed overhead		8,086
Total manufacturing costs		$125,604

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.

(a) Compute all of the materials and labor variances.

Total materials variance	$	UnfavorableFavorableNeither favorable nor unfavorable
Materials price variance	$	UnfavorableNeither favorable nor unfavorableFavorable
Materials quantity variance	$	Neither favorable nor unfavorableUnfavorableFavorable
Total labor variance	$	Neither favorable nor unfavorableFavorableUnfavorable
Labor price variance	$	Neither favorable nor unfavorableUnfavorableFavorable
Labor quantity variance	$	Neither favorable nor unfavorableUnfavorableFavorable

(b) Compute the total overhead variance.

Total overhead variance

FavorableNeither favorable nor unfavorableUnfavorable

Reference no: EM13572541

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