Help Sa Trico Company set the following standard unit costs for its single produ

Question

Help Sa Trico Company set the following standard unit costs for its single product. Direct materials (30 Ibs. e $5.10 per Ib.) Direct labor (6 hrs. e $15 per hr.) $153.00 90.00 42.00 66.00 le (6 hrs. 7 per hr.) Factory overhead-fixed (6 hrs. $11 per hr.) 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. 70% 39,200 80% 44,800 90% Production inl unita 50,400 302,400 235,200 268,800 Standard direct labor hours Budgeted overhead " Fixed factory overhead $2,956, 800 $2,956,800 $2,956, 800 $1,646,400 $1,881,600 $2,116,800 Variable factory overhead 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

Explanation / Answer

Solution 1:

Direct material price variance = $1,798,800 U

Direct material quantity variance = $66,300 F

Direct material cost variance = $1,798,800 U + $66,300 F= $1,732,500 U

Solution 2:

Direct labor rate variance = $748,500 F

Direct labor efficiency variance = $45,000 F

Direct labor cost variance = $748,500 F + $45,000 F = $793,500 F

Solution 3:

Actual overhead incurred = Variable overhead + Fixed overhead

= $2,438,500 + $2,604,700 = $5,043,200

Budgeted overhead for actual output = (50400 * 6 * $7) + (44800 * 6*$11) = $5,073,600

Overhead controllable variance = Budgeted overhead - Actual overhead = $5,073,600 - $5,043,200 = $30,400 F

Fixed overhead applied = 50400 * 6 * $11 = $3,326,400

Budgeted fixed overhead = 44800 * 6 * $11 = $2,956,800

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

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

Direct Material Cost Variance Actual Cost Standard cost for actual quantity Standard Cost AQ * AP = AQ * SP = SQ * SP = 1499000 $6.30 $9,443,700.00 1499000 $5.10 $7,644,900.00 1512000 $5.10 $7,711,200.00 $1,798,800 U $66,300 F Direct Material Price Variance Direct Material Qty variance

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