Isabella Company

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Isabella Company has developed the following standard costs for its product for 2019:


Standard Cost Card

Product A

Cost Element Standard Quantity × Standard Price = Standard Cost

Direct materials 4 pounds $3 $12

Direct labor 3 hours 8 24

Manufacturing overhead 3 hours 4 12


The company expected to produce 30,000 units of Product A in 2020 and work 90,000 direct labor hours.

Actual results for 2020 are as follows:

· 31,000 units of Product A were produced.

· Actual direct labor costs were $746,200 for 91,000 direct labor hours worked.

· Actual direct materials purchased and used during the year cost $346,500 for 126,000 pounds.

· Actual variable overhead incurred was $155,000 and actual fixed overhead incurred was $205,000.


Compute the following variances showing all computations to support your answers. Indicate whether the variances are favorable or unfavorable.

(a) Materials quantity variance.

(b) Total direct labor variance.

(c) Direct labor quantity variance.

(d) Direct materials price variance.

(e) Total overhead variance.






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