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. @
$4.80 per Ib.) |
$ |
144.00 |
Direct labor (7 hrs. @ $14 per
hr.) |
|
98.00 |
Factory overhead—variable (7
hrs. @ $6 per hr.) |
|
42.00 |
Factory overhead—fixed (7 hrs. @
$9 per hr.) |
|
63.00 |
Total standard cost |
$ |
347.00 |
|
The predetermined overhead rate is based on a planned operating
volume of 80% of the productive capacity of 67,000 units per
quarter. The following flexible budget information is
available.
|
Operating Levels |
|
|
70% |
|
80% |
|
90% |
Production in units |
|
46,900 |
|
53,600 |
|
60,300 |
Standard direct labor hours |
|
328,300 |
|
375,200 |
|
422,100 |
Budgeted overhead |
|
|
|
|
|
|
Fixed factory overhead |
$ |
3,376,800 |
$ |
3,376,800 |
$ |
3,376,800 |
Variable factory overhead |
$ |
1,969,800 |
$ |
2,251,200 |
$ |
2,532,600 |
|
During the current quarter, the company operated at 90% of capacity
and produced 60,300 units of product; actual direct labor totaled
399,200 hours. Units produced were assigned the following standard
costs.
|
|
|
Direct materials (1,809,000 Ibs.
@ $4.80 per Ib.) |
$ |
8,683,200 |
Direct labor (422,100 hrs. @ $14
per hr.) |
|
5,909,400 |
Factory overhead (422,100 hrs. @
$15 per hr.) |
|
6,331,500 |
Total standard cost |
$ |
20,924,100 |
|
Actual costs incurred during the current quarter follow.
|
|
|
Direct materials (1,711,000 Ibs.
@ $6.30 per lb.) |
$ |
10,779,300 |
Direct labor (399,200 hrs. @
$11.20 per hr.) |
|
4,471,040 |
Fixed factory overhead
costs |
|
2,813,700 |
Variable factory overhead
costs |
|
3,084,100 |
Total actual costs |
$ |
21,148,140 |
Required:
1. Compute the direct materials cost variance,
including its price and quantity variances.
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Actual Cost |
0 |
------ |
0 |
Standard Cost |
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$0 |
0 |
$0 |
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$0 |
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0 |
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2. Compute the direct labor cost variance,
including its rate and efficiency variances.
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Actual Cost |
0 |
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0 |
Standard Cost |
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$0 |
0 |
$0 |
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$0 |
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0 |
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3. Compute the overhead controllable and volume
variances.
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Controllable Variance |
Actual overhead |
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Budgeted overhead |
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Controllable variance |
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Fixed overhead volume variance |
Budgeted fixed overhead |
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Fixed overhead cost
applied |
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Fixed overhead volume
variance |
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