Lily Corporation manufactures a single product. The standard cost per unit of product is shown below. Direct materials-1 pound plastic at $8 per pound $8.00 Direct labor-2.0 hours at $12.50 per hour 25.00 11.00 Variable manufacturing overhead Fixed manufacturing overhead Total standard cost per unit 13.00 $57.00 The predetermined manufacturing overhead rate is $12 per direct labor hour ($24.00 +2.0). It was computed from a master manufacturing overhead budget based on normal production of 11,800 direct labor hours (5,900 units) for the month. The master budget showed total variable overhead costs of $64,900 ($5.50 per hour) and total fixed overhead costs of $76.700 ($6.50 per hour). Actual costs for October in producing 4.500 units were as follows. Direct materials (4,670 pounds) $38,294 Direct labor (8.880 hours) 113,664 Variable overhead 76,680 Fixed overhead 33,520 Total manufacturing costs $262,158 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. Overhead controllable variance $ Overhead volume variance $

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
icon
Related questions
Question

mi.3

Lily Corporation manufactures a single product. The standard cost per unit of product is shown below.
Direct materials-1 pound plastic at $8 per pound
$8.00
Direct labor-2.0 hours at $12.50 per hour
25.00
11.00
Variable manufacturing overhead
Fixed manufacturing overhead
Total standard cost per unit
13.00
$57.00
The predetermined manufacturing overhead rate is $12 per direct labor hour ($24.00 +2.0). It was computed from a master
manufacturing overhead budget based on normal production of 11,800 direct labor hours (5,900 units) for the month. The master
budget showed total variable overhead costs of $64,900 ($5.50 per hour) and total fixed overhead costs of $76.700 ($6.50 per hour).
Actual costs for October in producing 4.500 units were as follows.
Direct materials (4,670 pounds)
$38,294
Direct labor (8.880 hours)
113,664
Variable overhead
76,680
Fixed overhead
33,520
Total manufacturing costs
$262,158
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.
Overhead controllable variance
$
Overhead volume variance
$
Transcribed Image Text:Lily Corporation manufactures a single product. The standard cost per unit of product is shown below. Direct materials-1 pound plastic at $8 per pound $8.00 Direct labor-2.0 hours at $12.50 per hour 25.00 11.00 Variable manufacturing overhead Fixed manufacturing overhead Total standard cost per unit 13.00 $57.00 The predetermined manufacturing overhead rate is $12 per direct labor hour ($24.00 +2.0). It was computed from a master manufacturing overhead budget based on normal production of 11,800 direct labor hours (5,900 units) for the month. The master budget showed total variable overhead costs of $64,900 ($5.50 per hour) and total fixed overhead costs of $76.700 ($6.50 per hour). Actual costs for October in producing 4.500 units were as follows. Direct materials (4,670 pounds) $38,294 Direct labor (8.880 hours) 113,664 Variable overhead 76,680 Fixed overhead 33,520 Total manufacturing costs $262,158 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. Overhead controllable variance $ Overhead volume variance $
Expert Solution
steps

Step by step

Solved in 2 steps

Blurred answer
Recommended textbooks for you
FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
Accounting
ISBN:
9781259964947
Author:
Libby
Publisher:
MCG
Accounting
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education