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

Direct materials (30 Ibs. @ $5.10 per Ib.)	$	153.00
Direct labor (6 hrs. @ $15 per hr.)		90.00
Factory overhead—variable (6 hrs. @ $7 per hr.)		42.00
Factory overhead—fixed (6 hrs. @ $11 per hr.)		66.00
Total standard cost	$	351.00

The predetermined overhead rate is based on a planned operating volume of 80% of the productive capacity of 56,000 units per quarter. The following flexible budget information is available.

	Operating Levels
		70%		80%		90%
Production in units		39,200		44,800		50,400
Standard direct labor hours		235,200		268,800		302,400
Budgeted overhead
Fixed factory overhead	$	2,956,800	$	2,956,800	$	2,956,800
Variable factory overhead	$	1,646,400	$	1,881,600	$	2,116,800

During the current quarter, the company operated at 90% of capacity and produced 50,400 units of product; actual direct labor totaled 299,400 hours. Units produced were assigned the following standard costs.

Direct materials (1,512,000 Ibs. @ $5.10 per Ib.)	$	7,711,200
Direct labor (302,400 hrs. @ $15 per hr.)		4,536,000
Factory overhead (302,400 hrs. @ $18 per hr.)		5,443,200
Total standard cost	$	17,690,400

Actual costs incurred during the current quarter follow.

Direct materials (1,499,000 Ibs. @ $6.30 per lb.)	$	9,443,700
Direct labor (299,400 hrs. @ $12.50 per hr.)		3,742,500
Fixed factory overhead costs		2,604,700
Variable factory overhead costs		2,438,500
Total actual costs	$	18,229,400

(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

	Actual Variable OH Cost -1 Flexible Budget -1 Standard Cost (VOH applied) 0 2 -1 $0 0

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

AH = Actual Hours
SH = Standard Hours
AFR = Actual Fixed Rate
SFR = Standard Fixed Rate

	Actual Fixed OH Cost -1 Budgeted Overhead -1 Standard Cost (FOH applied) 0 2 -1 $0 0

(c) Compute the total overhead controllable variance.

	Overhead Controllable Variance Total overhead controllable variance

Answer 1

Solution a:

Variable overhead cost variance
Actual Variable OH Cost				Standard cost for actual hours				Standard Cost
AH*	AR =			AH*	SR =			SH *	SR =
299400	$8.14	$2,438,500.00		299400	$7.00	$2,095,800.00		302400	$7.00	$2,116,800.00
			$342,700 U				$21 ,000 F
			Variable overhead rate variance				Variable overhead efficiency variance

Variable overhead spending variance = Variable overhead rate variance + Variable overhead efficiency variance

= $342,700 U + $21,000 F = $321,700 U

Solution b:

Budgeted fixed overhead = $2,956,800

Actual fixed overhead = $2,604,700

Fixed overhead applied = Standard hours for actual production * Predetermined overhead rate

= 50400 * 6 * $11 = $3,326,400

Fixed overhead spending variance = Budgeted fixed overhead - Actual fixed overhead

= $2,956,800 - $2,604,700 = $352,100 F

Fixed overhead volume variance = Fixed overehead applied - Budgeted fixed overhead

= $3,326,400 - $2,956,800 = $369,600 F

Solution c:

Total overhead controllable variance = Variable overhead spending variance + Fixed overhead spending variance

= $321,700 U + $352,100 F = $30,400 F