Rondello Corporation manufactures a single product. The standard cost per unit of product is shown below.
|
Direct materials—1 pound plastic at $7.00 per pound |
$7.00 |
|
Direct labour—1.5 hours at $12.00 per hour |
18 |
|
Variable manufacturing overhead |
11.25 |
|
Fixed manufacturing overhead |
3.75 |
|
Total standard cost per unit |
$40.00 |
The predetermined manufacturing overhead rate is $10 per direct labour hour ($15.00 _ 1.5). It was computed from a master manufacturing overhead budget based on normal production of 7,500 direct labour hours (5,000 units) for the month. The master budget showed total variable costs of $56,250 ($7.50 per hour) and total fixed overhead costs of $18,750 ($2.50 per hour). Actual costs for October in producing 4,900 units were as follows.
|
Direct materials (5,100 pounds) |
$37,230 |
|
Direct labour (7,000 hours) |
87,500 |
|
Variable overhead |
56,170 |
|
Fixed overhead |
19,680 |
|
Total manufacturing costs |
$200,580 |
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.
Instructions
(a) Compute all of the materials and labour variances.
(b) Compute the total overhead variance.