Question

# Trico Company set the following standard unit costs for its single product. Direct materials (30 Ibs....

Trico Company set the following standard unit costs for its single product.

 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.

 Operating Levels 70% 80% 90% Production in units 42,000 48,000 54,000 Standard direct labor hours 210,000 240,000 270,000 Budgeted overhead 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.)

 Actual Variable OH Cost 1 Flexible Budget -1 Standard Cost (VOH applied) Actual hours x Actual variable rate Actual hours x Standard variable rate Standard hours x Standard variable rate 265,000 x \$8.30 265,000 x \$8.00 270,000 x \$8.00 \$2,200,000 \$2,120,000 \$2,160,000 \$80,000 0 \$40,000 1 Variable overhead spending variance \$80,000 Unfavorable Variable overhead efficiency variance 40,000 Favorable Total variable overhead variance \$40,000 Unfavorable

Compute the fixed overhead spending and volume variances. (Round "cost per unit" and "rate per hour" answers to 2 decimal places.)

 Actual Fixed OH Cost -1 Budgeted Overhead -1 Standard Cost (FOH applied) Actual hours x Standard fixed rate Standard hours x Standard fixed rate 265,000 x \$8.87 270,000 x \$10.00 \$2,350,000 \$2,400,000 \$2,700,000 \$50,000 2 \$300,000 -1 Fixed overhead spending variance \$50,000 Favorable Fixed overhead volume variance 300,000 Favorable Total fixed overhead variance \$350,000 Favorable

Compute the total overhead controllable variance.

• This last bit is all that I am needing help with!

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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