Milton Company planned to produce 21,000 units of its only product during the year. Milton established the following standard cost data for this product prior to the beginning of the year:

Assume that Milton (1) actually produced 22,000 units, (2) used 68,000 pounds of direct materials in production, (3) and incurred the following actual total costs:

Required

a. Calculate the variances for materials, labor, and variable overhead.

b. Does the difference between total actual costs and total standard costs equal the sum of all of the variances? Explain.

Transcribed Image Text:

Direct material (3 lbs. $5.00 per lb.) Direct labor (2 hrs. @ $17.50 per hr.) Variable overhead (2 hrs. @ $6 per hr.) Total standard cost per unit..... Total budgeted fixed overhead is $400,000. Per Unit $15.00 35.00 12.00 $62.00