chapter 23 PiGEzto.mneduc x i box 4,311 ) w ) ( x, ezto.mheducation.com/hm.tpx b
ID: 2594174 • Letter: C
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chapter 23 PiGEzto.mneduc x i box 4,311 ) w ) ( x, ezto.mheducation.com/hm.tpx below.) Trico Company set the following standard unit costs for its single product Direct materials (27 lbs.@ $3 per lb.) Direct labor (6 hrs.@$6 per hr.) Factory overhead-variable (6 hrs. @$4 per hr.) Factory overhead-fixed (6 hrs.@$5 per hr.) $ 81.00 36.00 24.00 30.00 Total standard cost $171.00 The predetermined overhead rate is based on a planned operating volume of 70% of the productive capacity of 80,000 units per quarter. The following flexible budget information is aailable. Operating Levels Production in units Standard direct labor hours 70% 56,000 288,000 336,000 384,000 60% 48,000 80% 64,000 . Budgeted overhead Fixed factory overhead Variable factory overhead $ 1,680,000 $1,680,000 $ 1,680,000 $ 1,152,000 $1344,000 $1,536,000 During the current quarter, the company operated at 80% of capacity and produced 64,000 units of product actual direct labor totaled 381,000 hours. Units produced were assigned the following standard costs: Direct materials (1,728,000 lbs. @$3 per lb.) Direct labor (384,000 hrs.@ $6 per hr.) Factory overhead (384,000 hrs.@ $9 per hr) $ 5,184,000 2,304,000 3,456,000 Total standard cost $10,944,000Explanation / Answer
1 Direct material price and quantity variance Actual material cost Projected material cost Standard material cost Actual Quantity * Actual price Actual Quantity * Standard price Standard Quantity * Standard price 1723000 3.1 1723000 3 1728000 3 5341300 5169000 5184000 172300 15000 Direct material price variance=5341300-5169000=172300 Unfavorable Direct material Quantity variance=5169000-5184000=15000 favorable Direct material cost variance=172300-15000=157300 Unfavorable 2 Direct labor rate and efficiency variance Actual labor cost Projected labor cost Standard labor cost Actual hours * Actual rate Actual hours * Standard rate Standard hours * Standard rate 381000 5.75 381000 6 384000 6 2190750 2286000 2304000 Direct labor rate variance=2190750-2286000=95250 favorable Direct labor efficiency variance=2286000-2304000=18000 favorable Direct labor variance=95250+18000=113250 favorable 3 Controllable variance Actual overhead (3378679+3163019) 6541698 Budgeted overhead (1680000+1536000) 3216000 Controllable variance 3325698 Unfavorable Fixed overhead volume variance Budgeted fixed overhead 1680000 Fixed overhead cost applied (384000*5) 1920000 Fixed overhead volume variance 240000 Favorable
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