Trico Company set the following standard unit costs for itssingle product.
| | |
| Direct materials (30 Ibs. @$4.40 per Ib.) | $ | 132.00 |
| Direct labor (6 hrs. @ $14 perhr.) | | 84.00 |
| Factory overhead—variable (6hrs. @ $8 per hr.) | | 48.00 |
| Factory overhead—fixed (6 hrs. @$11 per hr.) | | 66.00 |
| Total standard cost | $ | 330.00 |
|
The predetermined overhead rate is based on a planned operatingvolume of 80% of the productive capacity of 60,000 units perquarter. The following flexible budget information isavailable.
| Operating Levels |
| | 70% | | 80% | | 90% |
| Production in units | | 42,000 | | 48,000 | | 54,000 |
| Standard direct labor hours | | 252,000 | | 288,000 | | 324,000 |
| Budgeted overhead | | | | | | |
| Fixed factory overhead | $ | 3,168,000 | $ | 3,168,000 | $ | 3,168,000 |
| Variable factory overhead | $ | 2,016,000 | $ | 2,304,000 | $ | 2,592,000 |
|
During the current quarter, the company operated at 90% of capacityand produced 54,000 units of product; actual direct labor totaled265,000 hours. Units produced were assigned the following standardcosts.
| | |
| Direct materials (1,620,000 Ibs.@ $4.40 per Ib.) | $ | 7,128,000 |
| Direct labor (324,000 hrs. @ $14per hr.) | | 4,536,000 |
| Factory overhead (324,000 hrs. @$19 per hr.) | | 6,156,000 |
| Total standard cost | $ | 17,820,000 |
|
Actual costs incurred during the current quarter follow.
| | |
| Direct materials (1,339,000 Ibs.@ $6.20 per lb.) | $ | 8,301,800 |
| Direct labor (265,000 hrs. @$12.00 per hr.) | | 3,180,000 |
| Fixed factory overheadcosts | | 2,442,900 |
| Variable factory overheadcosts | | 2,736,900 |
| Total actual costs | $ | 16,661,600 |
|
Problem 21-4A Computation of materials, labor, and overheadvariances LO P2, P3
Required:
1. Compute the direct materials cost variance,including its price and quantity variances.
AQ = Actual Quantity
SQ = Standard Quantity
AP = Actual Price
SP = Standard Price
|
| | Actual Cost | | | | Standard Cost | | | | | | | | | | | | | | | | | | | | | | | | | | | | | $0 | 0 | $0 | | | | $0 | | | | 0 | | | |
|
2. Compute the direct labor cost variance,including its rate and efficiency variances.
AH = Actual Hours
SH = Standard Hours
AR = Actual Rate
SR = Standard Rate
| Actual Cost | | | | Standard Cost |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| $0 | 0 | $0 | |
|
| $0 | | |
| 0 | |
| |
3. Compute the overhead controllable and volumevariances.
|
| | Controllable Variance | | Actual overhead | | | | Budgeted overhead | | | Controllable variance |
|
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