Rondello Corporation manufactures a single product
Asked Nov 14, 2012, 07:42 AM
Direct materials—1 pound plastic at $6 per pound $ 6.00
Direct labor—1.50 hours at $11.00 per hour 16.50
Variable manufacturing overhead 11.25
Fixed manufacturing overhead 9.75
Total standard cost per unit $43.50
The predetermined manufacturing overhead rate is $14 per direct labor hour ($21 ÷ 1.50). It was computed from a master manufacturing overhead budget based on normal production of 8,250 direct labor hours (5,500 units) for the month. The master budget showed total variable costs of $61,875 ($7.50 per hour) and total fixed overhead costs of $53,625 ($6.50 per hour). Actual costs for October in producing 3,100 units were as follows.
Direct materials (3,250 pounds) $ 20,280
Direct labor (4,490 hours) 51,006
Variable overhead 45,961
Fixed overhead 21,299
Total manufacturing costs $138,546
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.