newconnect.mheducation.com Favorites Connect Saved Help Save It Problems Trico C

Question

newconnect.mheducation.com Favorites Connect Saved Help Save It Problems Trico Company set the following standard unit costs for its single product Direct naterials (30 Ibs. $4.80 per Ib.) Direct labor (6 hrs. $14 per hr.) Factory overhead variable (6 hrs. e $7 per hr. Factory overhead-fixed (6 hrs. $12 per hr. Total standard cost $144.00 84.00 42.00 72.00 $342.00 The predetermined overhead rate is based on a planned operating volume of 80% of the productive capacity of 66,000 units per quarter. The following flexible budget information is available Operating Levels 90 Production in unitB Standard direct Labor hours Budgeted overhead 277, 200 3:6,80 336, 400 46,200 277,200 52, 800 326,800 Fixed factory overhead Variable factory overhead 53r80,600 3,801,600 $3,801,600 $i,940,400 $2,217,600 $2,494, 800 During the current quarter, the company operated at 90% of capacity and produced 59,400 units of product actual direct labor totaled 303,800 hours. Units produced were assigned the following standard costs. Direct naterials 11,782,000 Ibe$4.80 per Ib.) Direet 1abor (356,400 hrs $14 per hr. ) ractory overhead (356,400 hrs· S19 per hr., Total standard cost s0,553,600 4,989,600 6,771,600 20,314,800 Actual costs incurred during the current quarter follow

Explanation / Answer

Solution:

Part 3(a) – Controllable Variance

Actual Factory Overhead (2,336,900 + 2,637,700)

$4,974,600

Budgeted Overhead (refer working)

$5,596,400

Controllable Variance (5596,400 - 4974,600)

$621,800

Favorable

Working:

Budgeted Allowance based on standard hours allowed:

Fixed Expenses Budgeted

$3,801,600

Variable Expenses (Std hours allowed refer note 356,400 hrs @ $7)

$1,794,800

Budgeted Factory Overhead

$5,596,400

Std hours allowed:

Actual Produced Units

59,400

Std Hours per unit allowed

6 hours

Total Std Hours allowed for actual production

356400

Part 3(b)

Fixed Overhead Volume Variance

Budgeted Fixed Overheads

$3,801,600

Absorbed Fixed Overheads

(Std allowed hours refer working above 356,400 @ $12)

$4,276,800

Fixed Overhead Volume Variance

$475,200

Favorable

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Actual Factory Overhead (2,336,900 + 2,637,700)

$4,974,600

Budgeted Overhead (refer working)

$5,596,400

Controllable Variance (5596,400 - 4974,600)

$621,800

Favorable

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