Question

The predetermined overhead rate is based on a planned operating volume of 80% of the productive capacity of 57,000 units per quarter. The following flexible budget information is available.

During the current quarter, the company operated at 90% of capacity and produced 51,300 units of product; actual direct labor totaled 304,800 hours. Units produced were assigned the following standard costs.

Required:
1. Compute the direct materials cost variance, including its price and quantity variances.
2. Compute the direct labor cost variance, including its rate and efficiency variances.
3. Compute the overhead controllable and volume variances

Answer 1

1. Direct Material		Please hit LIKE button if this helped. For any further explanation, please put your query in comment, will get back to you.							Trico Company
	Actual Cost				Flexible				Standard Cost
	AQ	AP	Actual Cost		AQ	SP	Flexible Cost		SQ	SP	Standard Cost
	1,519,000	$                                     7.30	$   11,088,700		1,519,000	$              4.80	$                  7,291,200		1,539,000	$     4.80	$      7,387,200
				Price Variance				Quantity Variance
				$                                      3,797,500				$                                                   96,000
				Unfavorable				Favorable
					U	$   3,797,500	Price Variance
					F	$         96,000	Quantity Variance
					U	$   3,701,500	Total Direct Material Variance
2. Direct Labor
	Actual Cost				Flexible				Standard Cost
	AH	AR	Actual Cost		AH	SR	Flexible Cost		SH	SR	Standard Cost
	304,800	$                                  13.00	$      3,962,400		304,800	$           14.00	$                  4,267,200		307,800	$ 14.00	$      4,309,200
				Rate Variance				Efficiency Variance
				$                                          304,800				$                                                   42,000
				Favorable				Favorable
					F	$       304,800	Rate Variance
					F	$         42,000	Efficiency Variance
					F	$       346,800	Total Labor Variance
3. Overhead controllable and volume variance
	Actual Overhead	$2,337,000+$2,187,800	$      4,524,800
	Budgeted Overhead 90% utilization-Actual Utilazation	$2,462,400+$2,154,600	$      4,617,000
	Controllable Variance		$            92,200
			Favorable
	Budgeted Fixed overhead		$      2,462,400
	Fixed Overhead Applied	51,300*6 Hours*$9	$      2,770,200
	fixed overhead volume variance		$         307,800
			Favorable