Question

In: Accounting

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. @ $4.90 per Ib.) $ 147.00 Direct labor (4 hrs. @ $16 per hr.) 64.00 Factory overhead—variable (4 hrs. @ $6 per hr.) 24.00 Factory overhead—fixed (4 hrs. @ $10 per hr.) 40.00 Total standard cost $ 275.00 The predetermined overhead rate is based on a planned operating volume of 80% of the productive capacity of 53,000 units per quarter. The following flexible budget information is available. Operating Levels 70% 80% 90% Production in units 37,100 42,400 47,700 Standard direct labor hours 148,400 169,600 190,800 Budgeted overhead Fixed factory overhead $ 1,696,000 $ 1,696,000 $ 1,696,000 Variable factory overhead $ 890,400 $ 1,017,600 $ 1,144,800 During the current quarter, the company operated at 90% of capacity and produced 47,700 units of product; actual direct labor totaled 185,800 hours. Units produced were assigned the following standard costs. Direct materials (1,431,000 Ibs. @ $4.90 per Ib.) $ 7,011,900 Direct labor (190,800 hrs. @ $16 per hr.) 3,052,800 Factory overhead (190,800 hrs. @ $16 per hr.) 3,052,800 Total standard cost $ 13,117,500 Actual costs incurred during the current quarter follow. Direct materials (1,412,000 Ibs. @ $7.70 per lb.) $ 10,872,400 Direct labor (185,800 hrs. @ $11.00 per hr.) 2,043,800 Fixed factory overhead costs 1,318,500 Variable factory overhead costs 1,282,700 Total actual costs $ 15,517,400

(a) Compute the variable overhead spending and efficiency variances. (Round "cost per unit" and "rate per hour" answers to 2 decimal places.) AH = Actual Hours SH = Standard Hours AVR = Actual Variable Rate SVR = Standard Variable Rate

Solutions

Expert Solution

  • Question only asks for Variable Overhead Variances
  • Actual data for Variable Overhead

Actual DATA for

47700

units

Quantity (AH)

Rate (AR)

Actual Cost

Variable Overhead

185800

$                6.90 [1282700 / 185800]

$     1,282,700.00

  • Standard data for Variable Overhead

Standard DATA for

15000

units

Quantity (SQ)

Rate (SR)

Standard Cost

[A]

[B]

[A x B]

Variable Overhead

( 4hr x 47700 units)=190800hr

$                   6.00

$ 1,144,800.00

  • All Variable Overhead Variances

Variable Overhead Rate Variance

(

Standard Rate

-

Actual Rate

)

x

Actual Labor Hours

(

$                        6.00

-

$                       6.90

)

x

185800

-167900

Variance

$          167,900.00

Unfavourable-U

Variable Overhead Efficiency Variance

(

Standard Hours

-

Actual Hours

)

x

Standard Rate

(

190800

-

185800

)

x

$                           6.00

30000

Variance

$           30,000.00

Favourable-F

Variable Overhead Spending Variance

(

Standard Cost

-

Actual Cost

)

(

$       1,144,800.00

-

$      1,282,700.00

)

-137900

Variance

$          137,900.00

Unfavourable-U


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