Materials, labor, and overhead variances—two-variance method
Fargo Company manufactures products in batches of 100 units per batch. The company uses a standard cost system and prepares budgets that call for 500 of these batches per period. Fixed overhead is $60,000 per period. The standard costs per batch follow:
Material (80 gallons)
$32
Labor (60 hours)
480
Factory overhead
252
Standard cost per batch
$764
During the period, 503 batches were manufactured, and the following costs were incurred:
Materials used (40,743 gallons)
$15,482.34
Labor (29,677 hours at $865 per hour)
256,706.05
Actual variable overhead
67,080.00
Actual fixed overhead
60,500.00
Required:
Calculate the variances for materials, labor, and overhead. For overhead, use the two-variance method.
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