Wagner Company developed the following standard costs for itsproduct for 2011:
Direct Materials - 4 pounds at $4.50 per pound
Direct Labor - 2 hours at $10.50 per hour
Based on their flexible budget, budgeted Manufacturing Overheadcosts are $80,000 of fixed costs plus variable costs of $4 perdirect labor hour. Normal capacity is set at 20,000 units ofproduct OR 40,000 DIRECT LABOR HOURS. (20,000 units x 2 labor hoursper unit)
Actual costs for 2011 were as follows:
a. 19,000 units of product were actually produced
b. Direct labor costs were $362,700 for 37,200 direct labor hoursactually worked.
c. Actual direct materials purchased and used during the yeear cost$361,900 for 77,000 pounds.
d. Total actual manufcaturing overhead costs were $227,000.
Compute the following yearly variances for Wagner company for 2011and indicate whether the variance is favorable (F) or unfavorable(U)
Use the following format for all variances: (Example: 1,000U)
1. Direct Materials Price Variance
Compute the Direct Materials Quantity Variance
Compute the total Direct Materials Variance.
Compute the Direct Labor Price Variance
Compute the Direct Labor Quantity Variance
Compute the total Direct Labor Variance
Compute the Variable Overhead Controllable Variance
Compute the Fixed Overhead Volume Variance
Compute the total Manufacturing Overhead Variance
Compute the total cost variance and indicate if favorable orunfavorable.
