Materials, labor, and overhead variances—two-variance method Fargo Company manufactures products… 1 answer below »

Materials, labor, and overhead variances—two-variance method

Fargo Company manufactures products in batches of 100 units per batch. The company uses a standard cost system and prepares budgets that call for 500 of these batches per period. Fixed overhead is $60,000 per period. The standard costs per batch follow:

Material (80 gallons)

$32

Labor (60 hours)

480

Factory overhead

252

Standard cost per batch

$764

During the period, 503 batches were manufactured, and the following costs were incurred:

Materials used (40,743 gallons)

$15,482.34

Labor (29,677 hours at $865 per hour)

256,706.05

Actual variable overhead

67,080.00

Actual fixed overhead

60,500.00

Required:

Calculate the variances for materials, labor, and overhead. For overhead, use the two-variance method.

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