I did the first parts I just don\'t understand (a) and (b) I attached it all in
ID: 2500586 • Letter: I
Question
I did the first parts I just don't understand (a) and (b)
I attached it all in case any of that information is needed
Trico Company set the following standard unit costs for its single product. Direct materials (27 lbs. S3.00 per lb.) Direct labor (6 hrs. $6.00 per hr.) Factory overhead-variable (6 hrs. S4.00 per hr.) Factory overhead-fixed (6 hrs. S5.00 per hr.) S 81.00 36.00 24.00 30.00 Total standard cost S 171.00 The predetermined overhead rate is based on a planned operating volume of 70% of the productive capacity of 50,000 units per quarter. The following flexible budget information is available. Operating Levels 60% 30,000 180,000 70% 35,000 210,000 80% Production in units Standard direct labor hours Budgeted overhead 40,000 240,000 Fixed factory overhead Variable factory overhead S 1,050,000 S1,050,000 S1,050,000 S 720,000 S 840,000 S 960,000 During the current quarter, the company operated at 80% of capacity and produced 40,000 units of product; actual direct labor totaled 232,000 hours. Units produced were assigned the following standard costs: Direct materials (1,080,000 lbs. $3.00 per lb.) Direct labor (240,000 hrs. $6.00 per hr.) Factory overhead (240,000 hrs. $9.00 per hr.) S 3,240,000 1,440,000 2,160,000 Total standard cost S 6,840,000 Actual costs incurred during the current quarter follow Direct materials (1,075,000 lbs$3.10) Direct labor (232,000 hrs. S5.75) Fixed factory overhead costs Variable factory overhead costs S 3,332,500 1,334,000 2,057,358 1,926,038 Total actual costs S 8,649,896Explanation / Answer
a)variable overhead spending :
Actual overhead rate - standard overhead rate * Actual hours worked
$28.42 - $19.50 * 232,000
=2,069,440
Actual overhead rate = Variable manufacturing overhead / Hours
= $6,592,538 / 232,000
=$28.42
Standard overhead rate = Standard manufacturing overhead / Hours
= $4,680,000 / 240,000
=$19.50
Explanation:
Total cost - fixed cost =Actual variable
=$8,649,896 - $2,057,358
= $6,592,538
Total cost - fixed cost = Standard variable
=$6,840,000 - $2,160,000
=$4,680,000
_________________________________________________________________________________
Variable overhead efficiency = Actual hours - standard hours * Standard overhead rate
= 232,000 - 240,000 * $19.50
=$156,000
________________________________________________________________________
b)Fixed overhead spending variance
Actual Fixed overhead rate - standard overhead rate * Actual hours worked
=$8.87 - 9 *232,000
=$30,160
Actual fixed cost = $2,057,358
Standard fixed cost =$2,160,000
Actual overhead rate = fixed manufacturing overhead / Hours
=$2,057,358 / 232,000=$8.87
=$8.87
Standard overhead rate = fixed manufacturing overhead / Hours
=$2,160,000 / 240,000
=$9
___________________________________________________________________
Fixed overhead volume variance
Actual Fixed overhead units = 40,000 units * $5=$200,000
Variable Fixed overhead units= 50,000 units *$5=$250,000
___________________________________________________
Total = $450,000
__________________________________________________________________________________
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