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# Variance calculation

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

Direct materials-1 pound plastic at \$7.00 per pound \$ 7.00
Direct labor-1.5 hours at \$12.00 per hour 18.00
Total standard cost per unit \$40.00

The predetermined manufacturing overhead rate is \$10 per direct labor hour (\$15.00 ÷ 1.5). It was computed from a master manufacturing overhead budget based on normal production of 7,500 direct labor hours (5,000 units) for the month. The master budget showed total variable costs of \$56,250 (\$7.50 per hour) and total fixed overhead costs of \$18,750 (\$2.50 per hour). Actual costs for October in producing 4,900 units were as follows.

Direct materials (5,100 pounds) \$ 37,230
Direct labor (7,000 hours) 87,500
Total manufacturing costs \$200,580

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.
Hint:
Compute variances.

Instructions

(a) Compute all of the materials and labor variances.

(b) Compute the total overhead variance.