Problem: Hansenko Company manufactures 100-pound bags of fertilizer that have the following unit standard costs for direct materials and direct labor:
Direct materials (100 lbs. @ $1.00 per lb.)$100.00
Direct labor 12.00 (0.5 hours at $24 per hour)
Total standard direct cost per 100 lb. bag$112.00
The following activities were recorded for October:
1,000 bags were manufactured.
95,000 lbs. of materials costing $76,000 were purchased.
102,500 lbs. of materials were used.
$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?