Dante's Statue Company produces lawn statues. The standard cost of producing one statue is:
Material (2.5 pounds x $2.80) ..........$ 7.00
Labor (.75 hours x $12) ...........$ 9.00
Overhead ..................$ 10.00
Total ................... $ 26.00
Standard variable overhead is $6.20 per unit, and fixed annual overhead is $95,000.At the start of 2012, expected production was 25,000 units. During 2012, 27,000 statues were produced.
The following information, related to actual costs incurred in 2012, is available:
1. Purchased 70,000 pounds of material for $182,000.
2. Used 68,200 pounds of material.
3. Worked 19,600 labor hours costing $254,800.
4. Actual overhead incurred was $260,000.
Required:
a. Show the calculation of the standard overhead rate per unit of $10.
b. Calculate all material, labor, and overhead variances.
c. Prepare a variance summary, and briefly comment on variances that should be investigated.