Problem 21-4B

Computing materials, labor, and overhead variances

P3 P4

Kryll Company set the following standard costs per unit for its single product.

Direct materials (25 lbs. @ $4 per lb.). .. . $100 Direct labor (6 hrs. @ $8 per hr.) . ... 48 Variable overhead (6 hrs. @ $5 per hr.). . . ... 30 Fixed overhead (6 hrs. @ $7 per hr.) . 42 Standard cost per unit $220Capacity Level 70% 80% 90% Production (in units) . . . . . . 42,000 units 48,000 units 54,000 units Standard direct labor hours (6 DLH/unit) ... 252,000 hrs. 288,000 hrs. . 324,000 hrs. Budgeted overhead (flexible budget) Fixed overhead . ... $2,016,000 $2,016,000 $2,016,000 Variable overhead $1,260,000 $1,440,000 $1,620,000Direct materials (1,050,000 lbs. @ $4 per lb.) $4.200,000 Direct labor (252,000 hrs. @ $8 per hr.) . .... 2.016,000 Overhead (252,000 hrs. @ $12 per hr.) . .... 3,024,000 Standard (budgeted) cost . ... $9.240,000Direct materials (1,000,000 lbs. @ $4.25 per lb.) . .. $4,250,000 Direct labor (250,000 hrs. @ $7.75 per hr.) . . ... 1,937.500 Fixed overhead. . .. . 1.960.000 Variable overhead . ... 1.200,000 Actual cost . .. . $9,347.500