Trico Company set the following standard unit costs for its single product. The
ID: 2398298 • Letter: T
Question
Trico Company set the following standard unit costs for its single product.
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.
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.
Actual costs incurred during the current quarter follow.
Problem 21-4A Computation of materials, labor, and overhead variances LO P2, P3
Required:
1. Compute the direct materials cost variance, including its price and quantity variances.
AQ = Actual Quantity
SQ = Standard Quantity
AP = Actual Price
SP = Standard Price
2. Compute the direct labor cost variance, including its rate and efficiency variances.
AH = Actual Hours
SH = Standard Hours
AR = Actual Rate
SR = Standard Rate
3. Compute the overhead controllable and volume variances.
Direct materials (30 Ibs. @ $4.40 per Ib.) $ 132.00 Direct labor (6 hrs. @ $14 per hr.) 84.00 Factory overhead—variable (6 hrs. @ $8 per hr.) 48.00 Factory overhead—fixed (6 hrs. @ $11 per hr.) 66.00 Total standard cost $ 330.00Explanation / Answer
Answers
Actual Cost
Standard cost for actual quantity purchased
Standard Cost
AQ
AP
Cost
AQ
SP
Cost
SQ
SP
Cost
1,339,000
$ 6.20
$ 8,301,800.00 (A)
1,339,000
$ 4.40
$ 5,891,600.00 (B)
1,620,000
$ 4.40
$ 7,128,000.00 (C)
Material Price Variance
$ 2,410,200.00
Material Quantity Variance
$ 1,236,400.00
Unfavourable [A – B]
Favourable [C – B]
Material Price Variance
$ 2,410,200.00
Unfavourable (1)
Material Quantity Variance
$ 1,236,400.00
Favourable (2)
Material Cost Variance
$ 1,173,800.00
Unfavourable (1 + 2)
Actual Cost
Standard cost for actual quantity purchased
Standard Cost
AH
AR
Cost
AH
SR
Cost
SH
SR
Cost
265,000
$ 12.00
$ 3,180,000.00 [A]
265,000
$ 14.00
$ 3,710,000.00 [B]
324,000
$ 14.00
$ 4,536,000.00 [C]
Labor Rate Variance
$ 530,000.00 [B – A]
Labor Efficiency Variance
$ 826,000.00 [C – B]
Favourable
Favourable
Labor Rate Variance
$ 530,000.00
Favourable [1]
Labor Efficiency Variance
$ 826,000.00
Favourable [2]
Labor Cost Variance
$ 1,356,000.00
Favourable [ 1+2]
Actual Overhead:
Variable (given)
$ 2,736,900.00
Fixed (given)
$ 2,442,900.00
Total Actual Overhead (A)
$ 5,179,800.00
Budgeted Overhead:
Variable [54,000 units x 6hr per unit x $ 8 per hour]
$ 2,592,000.00
Fixed [given at all level same]
$ 3,168,000.00
Total Budgeted Overhead (B)
$ 5,760,000.00
Controllable Variance (B – A)
$ 580,200.00 Favourable
Actual Cost
Standard cost for actual quantity purchased
Standard Cost
AQ
AP
Cost
AQ
SP
Cost
SQ
SP
Cost
1,339,000
$ 6.20
$ 8,301,800.00 (A)
1,339,000
$ 4.40
$ 5,891,600.00 (B)
1,620,000
$ 4.40
$ 7,128,000.00 (C)
Material Price Variance
$ 2,410,200.00
Material Quantity Variance
$ 1,236,400.00
Unfavourable [A – B]
Favourable [C – B]
Material Price Variance
$ 2,410,200.00
Unfavourable (1)
Material Quantity Variance
$ 1,236,400.00
Favourable (2)
Material Cost Variance
$ 1,173,800.00
Unfavourable (1 + 2)
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.