Bonita Corporation manufactures a single product. The standard cost per unit of product is shown below. Direct materials-1 pound plastic at $7 per pound Direct labor-1.5 hours at $11.00 per hour Variable manufacturing overhead Fixed manufacturing overhead Total standard cost per unit Direct materials (5,230 pounds) Direct labor (7,470 hours) Variable overhead Fixed overhead Total manufacturing costs $37.133 83,664 67,014 26,686 The predetermined manufacturing overhead rate is $12 per direct labor hour ($18.00+ 1.5). It was computed from a master manufacturing overhead budget based on normal production of 7,500 direct labor hours (5,000 units) for the month. The master budget showed total variable overhead costs of $41,250 ($5.50 per hour) and total fixed overhead costs of $48,750 ($6.50 per hour). Actual costs for October in producing 5,100 units were as follows. $214,497 Overhead volume variance $7.00 Overhead controllable variance $ 16.50 8.25 S 9.75 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. $41.50 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. Compute the overhead controllable variance and the overhead volume variance.
Bonita Corporation manufactures a single product. The standard cost per unit of product is shown below. Direct materials-1 pound plastic at $7 per pound Direct labor-1.5 hours at $11.00 per hour Variable manufacturing overhead Fixed manufacturing overhead Total standard cost per unit Direct materials (5,230 pounds) Direct labor (7,470 hours) Variable overhead Fixed overhead Total manufacturing costs $37.133 83,664 67,014 26,686 The predetermined manufacturing overhead rate is $12 per direct labor hour ($18.00+ 1.5). It was computed from a master manufacturing overhead budget based on normal production of 7,500 direct labor hours (5,000 units) for the month. The master budget showed total variable overhead costs of $41,250 ($5.50 per hour) and total fixed overhead costs of $48,750 ($6.50 per hour). Actual costs for October in producing 5,100 units were as follows. $214,497 Overhead volume variance $7.00 Overhead controllable variance $ 16.50 8.25 S 9.75 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. $41.50 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. Compute the overhead controllable variance and the overhead volume variance.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Bonita Corporation manufactures a single product. The standard cost per unit of product is shown below.
Direct materials-1 pound plastic at $7 per pound
Direct labor-1.5 hours at $11.00 per hour
Variable manufacturing overhead
Fixed manufacturing overhead
Total standard cost per unit
Direct materials (5,230 pounds)
Direct labor (7,470 hours)
Variable overhead
Fixed overhead
Total manufacturing costs
$37.133
83,664
67,014
The predetermined manufacturing overhead rate is $12 per direct labor hour ($18.00 +1.5). It was computed from a master
manufacturing overhead budget based on normal production of 7,500 direct labor hours (5,000 units) for the month. The master
budget showed total variable overhead costs of $41,250 ($5.50 per hour) and total fixed overhead costs of $48,750 ($6.50 per hour).
Actual costs for October in producing 5,100 units were as follows.
26,686
$214,497
Overhead volume variance
$7.00
16.50
Overhead controllable variance $
8.25
9.75
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.
S
$41.50
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.
Compute the overhead controllable variance and the overhead volume variance.
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