Problem: Sebastian Company, which manufactures electrical switches, uses a standard cost system and carries all inventories at standard. The standard manufacturing overhead costs per switch are based on direct labor hours and are shown below:
- Variable overhead
(5 hours @ $12 per direct manufacturing labor hour) $ 60
- Fixed overhead
(5 hours @ $15* per direct manufacturing labor hour) 75
Total overhead per switch$135
Based on capacity of 200,000 direct manufacturing labor hours per month.
The following information is available for the month of December:
46,000 switches were produced although 40,000 switches were scheduled to be produced.
225,000 direct manufacturing labor hours were worked at a total cost of $5,625,000.
Variable manufacturing overhead costs were $2,750,000
Q1. Under the 2-variance method, the flexible budget variance for December was ?
Q2. The total variable manufacturing overhead variance was?