Wilson Corporation manufactures a single product. The standard cost per unit of product is shown below. Direct materials—1 pound plastic at $7.00 per pound $ 7.00 Direct labor—1.6 hours at $12.00 per hour 19.20 Variable manufacturing overhead 12.00 Fixed manufacturing overhead 4.00 Total standard cost per unit $42.20 The predetermined manufacturing overhead rate is $10.00 per direct labor hour ($16.00 ÷ 1.6). It was computed from a master manufacturing overhead budget based on normal production of 8,000 direct labor hours (5,000 units) for the month. The master budget showed total variable costs of $60,000 ($7.50 per hour) and total fixed overhead costs of $20,000 ($2.50 per hour). Actual costs for October in producing 4,800 units were as follows. Direct materials (5,100 pounds) $ 36,720 Direct labor (7,400 hours) 92,500 Variable overhead 59,700 Fixed overhead 21,000 Total manufacturing costs $209,920 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. a)What is the total materials variance? b)What is the Materials price variance? c)What is the Materials quantity variance? d)What is the total labor variance? e)What is the labor price variance? f)What is the labor quantity variance? g)What is the total overhead variance?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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

Direct materials—1 pound plastic at $7.00 per pound		$ 7.00
Direct labor—1.6 hours at $12.00 per hour		19.20
Variable manufacturing overhead		12.00
Fixed manufacturing overhead		4.00
Total standard cost per unit		$42.20

The predetermined manufacturing overhead rate is $10.00 per direct labor hour ($16.00 ÷ 1.6). It was computed from a master manufacturing overhead budget based on normal production of 8,000 direct labor hours (5,000 units) for the month. The master budget showed total variable costs of $60,000 ($7.50 per hour) and total fixed overhead costs of $20,000 ($2.50 per hour). Actual costs for October in producing 4,800 units were as follows.

Direct materials (5,100 pounds)		$ 36,720
Direct labor (7,400 hours)		92,500
Variable overhead		59,700
Fixed overhead		21,000
Total manufacturing costs		$209,920

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.

a)What is the total materials variance?

b)What is the Materials price variance?

c)What is the Materials quantity variance?

d)What is the total labor variance?

e)What is the labor price variance?

f)What is the labor quantity variance?

g)What is the total overhead variance?

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