Question:
K-Rod Corporation uses a standard cost system and manufactures one product. The variable costs per product follow:
|
Materials (4 parts)
|
$2
|
|
Labor (2 hours)
|
6
|
|
Overhead
|
3
|
|
|
$11
|
Budgeted fixed costs for the month are $4,000, and K-Rod expected to manufacture 2,000 units. Actual production, however, was only 1,800 units. Materials prices were 10% over standard, and labor rates were 5% over standard. Of the factory overhead expense, only 80% was used, and fixed overhead was $100 over the budgeted amount. The actual variable overhead cost was $4,800. In materials usage, 8% more parts were used than were allowed for actual production by the standard, and 6% more labor hours were used than were allowed.
Required:
1. Calculate the materials and labor variances.
2. Calculate the variances for overhead by the four-variance method.