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Expert-verified Found in: Page 972 ### Financial & Managerial Accounting

Book edition 7th
Author(s) John J Wild, Ken W. Shaw, Barbara Chiappetta
Pages 1096 pages
ISBN 9781259726705

# A manufactured product has the following information for June. Standard Actual Direct materials 6 lbs.@ $8 per lbs. 48,500 lbs.@$8.10 per lb.Direct labor 2 hrs.@ $16 per hr. 15,700 hrs.@$16.50 per hr.Overhead 2 hrs.@ $12 per hr.$198,000Units manufactured 8,000Compute the: (1) Standard cost per unit and (2) Total cost variance for June. Indicate whether the cost variance is favorable or unfavorable.

(1) Standard cost per unit is $104. (2) The total cost variance is unfavorable. See the step by step solution ### Step by Step Solution ## Step 1: Meaning of Cost Variance The managers use the cost variance analysis to determine the difference between actual and standard costs. If the actual cost is less than the standard cost, the variance is considered favorable and vice versa. ## Step 2: Computation of standard cost per unit  Particulars Details Amounts ($) Direct material $8*6$48 Direct labor $16*2$32 Overhead $12*2$24 Total $104 ## Step 3: Computation of total cost variance • Computation of total standard cost:  Particulars Amounts ($) Direct material (8,000*48) 384,000 Direct labor (8,000*32) 256,000 Overhead (8,000*24) 192,000 Total standard cost $832,000 • Computation of total actual cost:  Particulars Amounts ($) Direct material (48,500*8.10) 392,850 Direct labor (15,700*16.50) 259,050 Overheads 198,000 Total actual cost \$849,900  ### Want to see more solutions like these? 