Trico Company set the following standard unit costs for its
|Direct materials (30 Ibs. @ $4 per Ib.)||$||120.00|
|Direct labor (5 hrs. @ $14 per hr.)||70.00|
|Factory overhead—Variable (5 hrs. @ $8 per hr.)||40.00|
|Factory overhead—Fixed (5 hrs. @ $10 per hr.)||50.00|
|Total standard cost||$||280.00|
The predetermined overhead rate is based on a planned operating volume of 80% of the productive capacity of 60,000 units per quarter. The following flexible budget information is available.
|Production in units||42,000||48,000||54,000|
|Standard direct labor hours||210,000||240,000||270,000|
|Fixed factory overhead||$||2,400,000||$||2,400,000||$||2,400,000|
|Variable factory overhead||$||1,680,000||$||1,920,000||$||2,160,000|
During the current quarter, the company operated at 90% of capacity and produced 54,000 units of product; actual direct labor totaled 265,000 hours. Units produced were assigned the following standard costs.
|Direct materials (1,620,000 Ibs. @ $4 per Ib.)||$||6,480,000|
|Direct labor (270,000 hrs. @ $14 per hr.)||3,780,000|
|Factory overhead (270,000 hrs. @ $18 per hr.)||4,860,000|
|Total standard cost||$||15,120,000|
Actual costs incurred during the current quarter follow.
|Direct materials (1,615,000 Ibs. @ $4.10 per lb.)||$||6,621,500|
|Direct labor (265,000 hrs. @ $13.75 per hr.)||3,643,750|
|Fixed factory overhead costs||2,350,000|
|Variable factory overhead costs||2,200,000|
|Total actual costs||$||14,815,250|
Compute the variable overhead spending and efficiency variances. (Round "cost per unit" and "rate per hour" answers to 2 decimal places.)
Compute the fixed overhead spending and volume variances. (Round "cost per unit" and "rate per hour" answers to 2 decimal places.)
Compute the total overhead controllable variance.
|Overhead Controllable Variance|
|Fixed overhead spending variance||$50,000||Favorable|
|Variable overhead efficiency variance||40,000||Favorable|
|Variable overhead spending variance||80,000||Unfavorable|
|Total overhead controllable variance||$10,000||Favorable|
Total overhead controllable variance= $50,000+40,000-80,000= $10,000
Fixed overhead spending variance and variable overhead spending variance has been calculated earlier.
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