Question

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

Direct materials—1 pound plastic at $8.00 per pound		$ 8.00
Direct labor—0.5 hours at $11.10 per hour		5.55
Variable manufacturing overhead		2.75
Fixed manufacturing overhead		5.25
Total standard cost per unit		$21.55

The predetermined manufacturing overhead rate is $16.00 per direct labor hour ($8.00 ÷ 0.5). It was computed from a master manufacturing overhead budget based on normal production of 2,500 direct labor hours (5,000 units) for the month. The master budget showed total variable costs of $13,750 ($5.50 per hour) and total fixed overhead costs of $26,250 ($10.50 per hour). Actual costs for October in producing 3,900 units were as follows.

Direct materials (4,060 pounds)		$ 32,886
Direct labor (1,750 hours)		19,950
Variable overhead		21,838
Fixed overhead		11,362
Total manufacturing costs		$86,036

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.

Answer 1

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Part 1				Part 2				Part 3
Standard Material Price		$ 8.00		Standard Hour Rate		$ 11.10		Standard Hour Rate		$          5.50
Standard Quantity	3900*1	3900		Standard Hour	3900*0.5	1950		Standard Hour	Given	1950
Actual Quantity	Given	4060		Actual Hours	Given	1750		Actual Hours	Given	1750
Actual Matrial Price	32886/4060	$ 8.10		Actual Hour Rate	19950/1750	$ 11.40		Actual Hour Rate	21838/1750	$        12.48
Material Price Variance	AQ(AP-SP)			Labor Rate Variance	AH(AR-SR)			Variable Overhead Rate Variance	AH(AR-SR)
	4060*(8.1-8)				1750*(11.4-11.1)				1750*(12.48-5.5)
	406 U				525 U				12215 U
Material Quantity Variance	SP(AQ-SQ)			Labor Efficiency Variance	SR(AH-SH)			Variable Overhead Efficiency Variance	SR(AH-SH)
	8*(4060-3900)				11.1*(1750-1950)				12.48*(1750-1950)
	1280 U				2220 F				2496 F
Part 3
Fixed Overhead Volume Variance	(SH*Budgeted Rate)- Budgeted
	(1950*10.5)-26250
	20475 F
Fixed Overhead Budget Variance Variance	Actual-Budgeted
	11362-26250
	14888 F