Purchase Solution

# Operations, Costs of Goods and Overhead Variance

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1. Information about the production and sales of its only product during its first month of operations:

Sales (\$225 per unit) \$405,000
Direct materials used \$176,000
Direct labor \$100,000
Variable selling and administrative expenses \$20,000
Fixed selling and administrative expenses \$10,000

Ending inventories:

Direct materials -0-
WIP -0-
Finished goods 200 units

The cost of goods sold under variable costing is_____.

a. \$320,000
b. \$360,000
c. \$288,000
d. \$272,000

2. Company's overhead cost information is given below:

Budgeted overhead based on standard machine hours allowed \$230,000

Budgeted overhead based on actual machine hours used \$215,000

a. Compute the total overhead variance.

##### Solution Summary

This solution shows step-by-step calculations to determine the cost of goods sold under variable costing and the total overhead variance.

##### Solution Preview

1. Information about the production and sales of its only product during its first month of operations:

Sales (\$225 per unit) \$405,000
Direct materials used \$176,000
Direct labor \$100,000
Variable selling and administrative expenses \$20,000
Fixed selling and administrative expenses \$10,000

Ending ...

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