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Costello Corporation manufactures a single product The standard cost per unit of product is shown below Direct materialsAc 2 pound plastic at $8 per pound

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

Direct materialsAc€??2 pound plastic at $8 per pound   $ 16.00
Direct laborAc€??2.00 hours at $12.00 per hour   24.00
Variable manufacturing overhead   15.00
Fixed manufacturing overhead   9.00
Total standard cost per unit   $64.00


The predetermined manufacturing overhead rate is $12 per direct labor hour ($24.00 Af· 2.00). It was computed from a master manufacturing overhead budget based on normal production of 10,600 direct labor hours (5,300 units) for the month. The master budget showed total variable costs of $79,500 ($7.50 per hour) and total fixed overhead costs of $47,700 ($4.50 per hour). Actual costs for October in producing 4,600 units were as follows.

Direct materials (9,350 pounds)   $ 76,670
Direct labor (9,050 hours)   111,949
Variable overhead   83,131
Fixed overhead   29,329
    Total manufacturing costs   $301,079


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   $    Neither favorable nor unfavorableFavorableUnfavorable
Overhead volume variance   $    Neither favorable nor unfavorableUnfavorableFavorable

May 21 2020 View more View Less

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