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# Compute Hansenko material Reynolds variable overhead variance

COST MANAGEMENT

? Hansenko Company manufactures 100-pound bags of fertilizer that have the following unit standard costs for direct materials and direct labor:
&#61607; Direct materials (100 lbs. @ \$1.00 per lb.)\$100.00
&#61607; Direct labor 12.00&#8194;&#8194;(0.5 hours at \$24 per hour)
&#61607; Total standard direct cost per 100 lb. bag\$112.00

The following activities were recorded for October:
&#61607; 1,000 bags were manufactured.
&#61607; 95,000 lbs. of materials costing \$76,000 were purchased.
&#61607; 102,500 lbs. of materials were used.
&#61607; \$12,000 was paid for 475 hours of direct labor

There were no beginning or ending work-in-process inventories

Required:
a. Compute the direct materials variances.
b. Compute the direct labor variances.
c. Give possible reasons for the occurrence of each of the preceding variance

? Reynolds Manufacturing Company has the following information pertaining to a normal monthly 10,000 units of:

Standard factory overhead rates are based on a normal monthly volume of one standard direct hour per unit.

Standard factory overhead rates per direct labor hour are:
Fixed \$ 6.00
Variable 10.00 \$16.00
Units actually produced in current month 9,000 units

Actual factory overhead costs incurred (includes \$70,000 fixed) \$156,000

Actual direct labor hours 9,000 hours

What is the variable overhead spending variance for Reynolds?

#### Solution Summary

The expert computes Hansenko material Reynolds variable overhead variances.

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