Trico Company set the following standerd unt costs for ts single product Direct

Question

Trico Company set the following standerd unt costs for ts single product Direct matenals (29 lbs. @$4 per lb.) Direct labor (8 hrs. $8 per hr.) Factory overhead-variable (8 hrs$5 per hr) Factory overheed-ftxed (8 hrs.@$7 per hr) $ 116.00 64.00 40.00 56.00 276.00 Total standard cost The predetermined overhead rate is based on a planned operating volume of 70% of the product ve capacity of 80,000 units per quarter. The following flexible budget information is available. Operating Levels Production in units Standard direct labor hours Budgeted overhead 70% 56,000 384,000 448,000 512,000 60% 48,000 80% 64,000 Fixed foctory overheacd Vanable fectory overhend s3,136,000 $3,136,000 $ 3,136,000 $1,920,000 $2,240,000 $2,560,000 Dunng the current quarter. the company operated at 80% of capacity and produced 64,000 units of product; actual direct labor totaled 508,000 hours Units produced were assigned the following standard costs Direct maternals (1,856,000 ibs. @$4 per ib) Direct labor (512,000 hrs o $8 per hr) Factory overheed (512.,000 hrs. a $12 per hr Total standard cost 7,424.,000 4,096,00O 6,144,000 $ 17,664,000 Actual cosss incurred during the current quarter follow Direct matenais 1851,000 lbs. o $410 per ib.) 7.589.100 Direct labor osos.ooo hetS7 75 per re) Ftxed factory overhead costs Vanable tactory overhead coss Total actual costs 3,937 000 4,504,906 217 358 s 20.248,364 O , ype here

Explanation / Answer

Requirement 2 Direct labour Actual Cost Difference Flexible Budget Difference Standard Cost Actual hours Actual Rate Actual Cost Actual hours Standard rate Standard hours Standard rate Standard cost                                                                       508,000 $                        7.75 $                       3,937,000.00                  508,000.00                              8 $         4,064,000                 512,000 $                    8.00 $     4,096,000.00 $             127,000.00 $         32,000.00 Labour price variance $           127,000.00 ($4,064,000-$3,937,000) Labour quantity variance $              32,000.00 ($4,096,000-$4,064,000) Labour cost variance $           159,000.00 ($4,096,000-$3,937,000)

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