Trico Company set the following standard unit costs for its single product. Dire

Question

Trico Company set the following standard unit costs for its single product. Direct materials (30 Ibs. $4.80 per Ib.) Direct labor (7 hrs. $14 per hr. Factory overhead-variable (7 hrs. $6 per hr.) Factory overhead-fixed (7 hrs. $9 per hr.) Total standard cost $144.00 98.00 42.00 63.00 $347.00 The predetermined overhead rate is based on a planned operating volume of 80% of the productive capacity of 64,000 units per quarter. The following flexible budget information is available Operating Levels 70 80% 90 Production in units Standard direct labor hours Budgeted overhead 44, 800 313,600 1,200 358, 400 57,600 403,200 Fixed factory overhead Variable factory overhead $3,225, 600 $1,881, 600 $3,225, 600 $2,150, 400 $3, 225, 600 $2,419,200 During the current quarter, the company operated at 90% of capacity and produced 57,600 units of product, actual direct labor totaled 400,200 hours. Units produced were assigned the following standard costs 8,294,400 5, 644, 800 6, 048, 000 $19,987,200 Direct materials (1,728,000 Ibs. $4.80 per Direct labor (403,200 hrs. $14 per hr.) Factory overhead (403,200 hrs. $15 per hr.) Total standard cost Actual costs incurred during the current quarter follovw Direct materials (1,715,000 Ibs. $6.30 per lb. $10,804,500 Direct labor (400,200 hrs. $11.00 per hr.) Fixed factory overhead costs Variable factory overhead costs Total actual COstS 4, 402,200 2,813,800 2, 634,200 $20,654,700

Explanation / Answer

a) Actual Variable OH Cost 1 Flexible Budget -1 Standard Cost (VOH applied) AH x AVR AH x SVR SH x SVR 400,200 x $     6.58 400200 x $6.00 403,200 x $6.00 $2,633,316 $2,401,200 $2,419,200 $232,116 0 $18,000 Variable overhead spending variance $     232,116 Unavorable Variable overhead efficiency variance $       18,000 Favorable Total variable overhead variance $     214,116 Unfavorable (b) Actual Fixed OH Cost -1 Budgeted Overhead -1 Standard Cost (FOH applied) AH x AFR SH x SFR 400,200 x $     7.03 403200 x $9.00 $2,813,406 $3,225,600 $ 3,628,800 $412,194 2 $       403,200 -1 Fixed overhead spending variance $     412,194 Favorable Fixed overhead volume variance $     403,200 Favorable Total fixed overhead cost variance $     815,394 Favorable

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