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The Beal Manufacturing Company's job costing system has two direct cost categories, direct materials and direct manufacturing labour.
The Beal Manufacturing Company's job costing system has two direct cost categories, direct materials and direct manufacturing labour. Manufacturing overhead (both variable and fixed) is allocated to products on the basis of standard direct manufacturing labour-hours (DLH). At the beginning of 2013, Beal adopted the following standards for its manufacturing costs based on production of 8,000 units:
Input Cost per Output Unit
Direct materials3 kilograms at $5 per kilogram$ 15
Direct manufacturing labour5 hours at $15 per hour 75
Variable Fixed$6 per DLH 30
Fixed Cost$8 per DLH 40
Standard manufacturing cost per output unit$160
The denominator level for total manufacturing overhead per month in 2013 is 40,000 direct manufacturing labour-hours. The records for January indicate the following:
Direct materials purchased25,000 kilograms for $ 130,000
Direct materials used23,100 kilograms
Direct manufacturing labour40, 100 hours, at $14.60 per hour
Total actual manufacturing overhead
Actual production7,800 output units
For the month of January 2013, compute Material, Labour and Variable Overhead Variances.