Question

Parker Plastic, Inc., manufactures plastic mats to use with rolling office chairs. Its standard cost information for last year follows: Direct materials (plastic) Direct labor Variable manufacturing overhead (based on direct labor hours) Fixed manufacturing overhead $559,200 - 932,000 units) Standard Quantity 12 sq ft. 0.25 hr. 0.25 hr. Standard Price (Rate) $ 1.00 per sq. ft. $ 12.80 per hr. $ 2.00 per hr. Standard Unit Cost $12.00 3.20 0.50 0.60 Parker Plastic had the following actual results for the past year: $ Number of units produced and sold Number of square feet of plastic used Cost of plastic purchased and used Number of labor hours worked Direct labor cost Variable overhead cost Fixed overhead cost 1,260,000 12,500,000 11,250,000 330,000 4,026,000 1,480,000 387,000 $ $ $ Required: Calculate Parker Plastic's variable overhead rate and efficiency variances and its over- or underapplied variable overhead. (Do not round intermediate calculations. Indicate the effect of each variance by selecting "F" for Favorable/Overapplied and "U" for Unfavorable/Underapplied.) Variable Overhead Rate Variance Variable Overhead Efficiency Variance Variable Overhead Spending Variance

Answer 1

lo Varuable overhead rate variance for this) standard rate per hour - Actual rate per hour lor < $2 - ( $14,80,000 1 - 330,000 <$= $4-48. 2$248485U (Rounded olt) variable overhead rate variance 2$2.4845 u per hr ? $2.48485 X0:25 2 $0.6212125Uper unit 2. variable overhead efficiency variance (standard his for actual output - Actual hrs ) x standard rate perts c (12/60000 X0.25 _ 3,30,000 ) x $2 ? $ 30,000 V

por hour 1 3 variable overhead spending variance e Actual hours x Stanlowd rate - Actual variable cost = 3,30,000 X $ 2 - $14,80,000 2 $8,20,000 U