Question

McDormand Co. manufactures products in batches of 100 units per batch. The company uses a standard cost system and prepares budgets that call for 500 of these batches per period. Fixed overhead is $60,000 per period. The standard costs per batch follow:
Material (80 gallons) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 32
Labor (60 hours) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 480
Factory overhead . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 252
Standard cost per batch . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $764
During the period, 503 batches were manufactured, and the following costs were incurred:
Materials used (40,743 gallons) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 15,482.34
Labor (29,677 hours at $8.65 per hour) . . . . . . . . . . . . . . . . . . . . . . . . . . . 256,706.05
Actual variable overhead . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67,080.00
Actual fixed overhead . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60,500.00

Required:
Calculate the variances for materials, labor, and overhead. For overhead, use the two variance method.



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  • CreatedMay 05, 2014
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