Question

Need help with the following accounting problem.

Required information Use the following information for the Problems below. [The following information applies to the questions displayed below.) Trico Company set the following standard unit costs for its single product. Direct materials (30 Ibs. @ $5.00 per Ib.) Direct labor (7 hrs. @ $14 per hr.) Factory overhead-variable (7 hrs. @ $7 per hr.) Factory overhead-fixed (7 hrs. @ $9 per hr.) Total standard cost $150.00 98.00 49.00 63.00 $360.00 The predetermined overhead rate is based on a planned operating volume of 80% of the productive capacity of 61,000 units per quarter. The following flexible budget information is available. Operating Levels 70% 80% 90% 42,700 48,800 5 4,900 298,900 341,600 384,300 Production in units Standard direct labor hours Budgeted overhead Fixed factory overhead Variable factory overhead $3,074,400 $3,074,400 $3,074,400 $2,092,300 $2,391,200 $2,690,100

Answer 1

Solution 1:

Direct Material Cost Variance
Actual Cost					Standard cost for actual quantity					Standard Cost
AQ *	AP =				AQ *	SP =				SQ *	SP =
1364000	$7.80	$10,639,200.00			1364000	$5.00	$6,820,000.00			1647000	$5.00	$8,235,000.00
			$3,819,200.00	Unfavorable				$1,415,000.00	Favorable
			Direct Material Price Variance					Direct Material Qty variance
Direct material price variance					$3,819,200.00	Unfavorable
Direct material quantity variance					$1,415,000.00	Favorable
Total direct material variance					$2,404,200.00	Unfavorable

Solution 2:

Direct Labor Cost Variance
Actual Cost					Standard cost for actual quantity					Standard Cost
AH *	AR =				AH *	SR =				SH *	SR =
316300	$11.10	$3,510,930.00			316300	$14.00	$4,428,200.00			384300	$14.00	$5,380,200.00
			$917,270.00	Favorable				$952,000.00	Favorable
			Direct Labor rate Variance					Direct Labor Efficiency Variance
Direct Labor Rate variance					$917,270.00	Favorable
Direct Labor Efficiency variance					$952,000.00	Favorable
Total direct labor variance					$1,869,270.00	Favorable

Solution 3:

Controllable Variance
Actual overhead	$5,090,600.00
Budgeted overhead	$5,764,500.00
Controllable variance	$673,900.00	Favorable

Fixed overhead volume variance
Budgeted fixed overhead	$3,074,400.00
Fixed overhead cost applied	$3,458,700.00
Fixed overhead volume variance	$384,300.00	Favorable