Bramble Corporation manufactures a single product. The standard cost per unit of product is shown below. Direct materials-2 pound plastic at $6 per pound Direct labor-10 hours at $12.00 per hour Variable manufacturing overhead Fixed manufacturing overhead Total standard cost per unit Direct materials (10,330 pounds) Direct labor (5,000 hours) Variable overhead Fixed overhead Total manufacturing costs Show Transcribed Text The predetermined manufacturing overhead rate is $14 per direct labor hour ($14.00+ 1.0). It was computed from a master manufacturing overhead budget based on normal production of 5,200 direct labor hours (5.200 units) for the month. The master budget showed total variable overhead costs of $36,400 ($7.00 per hour) and total fixed overhead costs of $36,400 ($7.00 per hour). Actual costs for October in producing 5.100 units were as follows. $64,046 61.000 52.122 21,578 $198.746 Overhead controllable variance S Overhead volume variance $12.00 12.00 7.00 7.00 $ $38.00 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. 3
Bramble Corporation manufactures a single product. The standard cost per unit of product is shown below. Direct materials-2 pound plastic at $6 per pound Direct labor-10 hours at $12.00 per hour Variable manufacturing overhead Fixed manufacturing overhead Total standard cost per unit Direct materials (10,330 pounds) Direct labor (5,000 hours) Variable overhead Fixed overhead Total manufacturing costs Show Transcribed Text The predetermined manufacturing overhead rate is $14 per direct labor hour ($14.00+ 1.0). It was computed from a master manufacturing overhead budget based on normal production of 5,200 direct labor hours (5.200 units) for the month. The master budget showed total variable overhead costs of $36,400 ($7.00 per hour) and total fixed overhead costs of $36,400 ($7.00 per hour). Actual costs for October in producing 5.100 units were as follows. $64,046 61.000 52.122 21,578 $198.746 Overhead controllable variance S Overhead volume variance $12.00 12.00 7.00 7.00 $ $38.00 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. 3
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Variance Analysis
In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.
Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
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