Question

Inman Corporation manufactures a single product. The standard cost per unit of product is as follows: Direct materials—2 kg of plastic at $5.50 per kilogram $11.00 Direct labour—2 hours at $11.35 per hour 22.70 Variable manufacturing overhead 9.80 Fixed manufacturing overhead 5.30 Total standard cost per unit $48.80 The master manufacturing overhead budget for the month based on the normal productive capacity of 20,800 direct labour hours (10,400 units) shows total variable costs of $104,000 ($5 per labour hour) and total fixed costs of $83,200 ($4 per labour hour). Normal production capacity is 20,800 direct hours. Overhead is applied based on direct labour hours. Actual costs for producing 10,140 units in November were as follows: Direct materials (20,500 kg) $111,725 Direct labour (20,280 hours) 234,234 Variable overhead 101,920 Fixed overhead 82,160 Total manufacturing costs $530,039 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.

Calculate all of the materials and labour variances. (Round intermediate calculations to 2 decimal places, e.g. 1.25 and final answers to 0 decimal places, e.g. 125.) Total materials variance $ UnfavourableNeither favourable nor unfavourableFavourable Materials price variance $ UnfavourableNeither favourable nor unfavourableFavourable Materials quantity variance $ Neither favourable nor unfavourableFavourableUnfavourable Total labour variance $ FavourableUnfavourableNeither favourable nor unfavourable Labour price variance $ Neither favourable nor unfavourableUnfavourableFavourable Labour quantity variance $ FavourableUnfavourableNeither favourable nor unfavourable

Calculate the total overhead variance. Total overhead variance $ Neither favourable nor unfavourableFavourableUnfavourable

Calculate the overhead budget variance and the overhead volume variance. Overhead budget variance $ UnfavourableFavourableNeither favourable nor unfavourable Overhead volume variance $ UnfavourableFavourableNeither favourable nor unfavourable

Answer 1