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Buil Corporation

Price: $2.50

Buil Corporation manufactures a single product. The standard cost per unit of
product is as follows.

Direct materials -  pounds of plastic at $6 per pound   12.0
Direct labor - 2 hours at $13 per hour   26.0
Variable manufacturing overhead   7.0
Fixed manufacturing overhead   5.0
Total standard cost per unit   50.0

The master manufacturing overhead budget for the month based on normal productive
capacity of 20,000 direct labor hours (10,000 units) shows total variable costs of $70,000
($3.50 per labor hour) and total fixed costs of $50,000 ($2.50 per labor hour). Normal
productive capacity is 20,000 direct labor hours. Overhead is applied on the basis of direct
labor hours. Actual costs for November in producing 9,700 units were as follows.

Direct materials (20,000 pounds)   119,000
Direct labor (19,600 hours)   256,760
Variable overhead   68,800
Fixed overhead   50,000
Total manufacturing costs   494,560

The purchasing department normally 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.
(b) Compute the total overhead variance.

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