Manatee Corp Manatee Actually Produced 330,000 Units at 75% of Capacity and Level

question 87

Essay

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:
$\begin{array}{llr} \text { Direct materials(0.5 lbs.@\$1/1b.) } & \text { \( \$ 0.50 \) per unit } \\ \text { Direct labor (1 hour@\$6/hour)} & \text { \( \$ 6.00 \) per unit } \\ \text {Overhead(1hour@\$2.05/hour) } & \text { \( \$ 2.05 \) per unit } \\\end{array}$

Manatee actually produced 330,000 units at 75% of capacity and actual costs for the period were:
$$\begin{array} { l l } \text { Direct materials } ( 162,000lbs ) & \$ 170,100 \\\text { Direct labor (329,500hours) } & \$ 2,042,900 \\\text { Fixed overhead } & \$ 438,000 \\\text { Variable overhead } & \$ 262,000\end{array}$$
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:
$__________________

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Definitions:

Literally Occur

An event or action that takes place exactly as described or indicated without metaphor or exaggeration.

Agreement

A mutual understanding or arrangement between two or more parties outlining their respective rights and duties.

Novation

Novation is the legal act of replacing an existing obligation with a new one, substituting a new party or obligation into an original contract.

Original Promisor

The individual or entity who initially makes a promise in a contractual agreement, especially in contexts involving subsequent assignments or transfers of obligations.