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Question
Manatee Corp. has developed standard costs based on a predicted operating level of 352,000 units of production, which is 80% of capacity. Variable overhead is $281,600 at this level of activity, or $0.80 per unit. Fixed overhead is $440,000. The standard costs per unit are:
| Direct materials (0.5 lbs. @ $1/1b.) | $0.50 per unit |
| Direct labor (1 hour @ $6/hour) . | $6.00 per unit |
| Overhead (1 hour @ $2.05/hour) | $2.05 per unit |
Manatee actually produced 330,000 units at 75% of capacity and actual costs for the period were:
| Direct materials (162,000 lbs.) . | $ 170,100 |
| Direct labor (329,500 hours) . | $2,042,900 |
| Fixed overhead | $ 438,000 |
| Variable overhead . | $ 262,000 |
Calculate the following variances and indicate whether each variance is favorable or unfavorable:
(1) Direct labor efficiency variance: $__________________
(2) Direct materials price variance: $__________________
(3) Controllable overhead variance: $__________________
Answer
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