rico Company set the following standard unit costs for its single product. Direc

Question

rico Company set the following standard unit costs for its single product. Direct materials (30 Ibs. $5.00 per Ib.) Direct labor (7 hrs. G $14 per hr.) Factory overhead-variable (7 hrs. e $7 per hr.) Factory overhead-fixed (7 hrs. 8 $9 per hr.) Total standard cost $150.00 98.00 49.00 63.00 $360.00 The predetermined overhead rate is based on a planned operating volume of 80% of the productive capacity of 51,000 units per quarter. The following flexible budget information is available. Operating Levels 70% 35,700 249,900 80% 40,800 285,600 90% Production in units Standard direct labor hours Budgeted overhead 45,900 321,300 Fixed factory overhead Variable factory overhead $2,570,400 $2,570,400 $2,570,400 $1,749,300 $1,999,200 $2,249,100 During the current quarter, the company operated at 90% of capacity and produced 45,900 units of product, actual direct labor totaled 317,300 hours. Units produced were assigned the following standard costs. Direct materials (1,377,000 Ibs. $5.00 per Ib.) Direct labor (321,300 hrs. 6 $14 per hr.) Factory overhead (321,300 hrs. $16 per hr.) Total standard cost $ 6,885,000 4,498,200 5,140,800 $16,524,000

Explanation / Answer

Solution a:

Variable overhead spending variance = Variable overhead rate variance + Variable overhead efficiency variance

= $71,200 U + $28,000 F = $43,200 U

Solution b:

Budgeted fixed overhead = $2,570,400

Actual fixed overhead = $2,448,500

Fixed overhead applied = Standard hours for actual production * Predetermined fixed overhead rate

= 321300 * $9 = $2,891,700

Fixed overhead spending variance = Budgeted fixed overhead - Actual fixed overhead

= $2,570,400 - $2,448,500 = $121,900 F

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

= $2,891,700 - $2,570,400 = $321,300 F

Solution 3:

Overhead controllable variance = Variable overhead spending variance + Fixed overhead spending variance

= $43,200 U + $121,900 F = $78,700 F

Variable overhead cost variance Actual Variable OH Cost Standard cost for actual hours Standard Cost AH* AR = AH* SR = SH * SR = 317300 $7.22 $2,292,300.00 317300 $7.00 $2,221,100.00 321300 $7.00 $2,249,100.00 $71,200 U $28,000 F Variable overhead rate variance Variable overhead efficiency variance

Related Questions

Navigate

• Browse (All)
• Browse R
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.