Trico Company set the following standard unit costs for its
single product.
Direct materials (30 Ibs. @ $4.80 per Ib.) | $ | 144.00 |
Direct labor (7 hrs. @ $14 per hr.) | 98.00 | |
Factory overhead—variable (7 hrs. @ $6 per hr.) | 42.00 | |
Factory overhead—fixed (7 hrs. @ $9 per hr.) | 63.00 | |
Total standard cost | $ | 347.00 |
The predetermined overhead rate is based on a planned operating
volume of 80% of the productive capacity of 67,000 units per
quarter. The following flexible budget information is
available.
Operating Levels | ||||||
70% | 80% | 90% | ||||
Production in units | 46,900 | 53,600 | 60,300 | |||
Standard direct labor hours | 328,300 | 375,200 | 422,100 | |||
Budgeted overhead | ||||||
Fixed factory overhead | $ | 3,376,800 | $ | 3,376,800 | $ | 3,376,800 |
Variable factory overhead | $ | 1,969,800 | $ | 2,251,200 | $ | 2,532,600 |
During the current quarter, the company operated at 90% of capacity
and produced 60,300 units of product; actual direct labor totaled
399,200 hours. Units produced were assigned the following standard
costs.
Direct materials (1,809,000 Ibs. @ $4.80 per Ib.) | $ | 8,683,200 |
Direct labor (422,100 hrs. @ $14 per hr.) | 5,909,400 | |
Factory overhead (422,100 hrs. @ $15 per hr.) | 6,331,500 | |
Total standard cost | $ | 20,924,100 |
Actual costs incurred during the current quarter follow.
Direct materials (1,711,000 Ibs. @ $6.30 per lb.) | $ | 10,779,300 |
Direct labor (399,200 hrs. @ $11.20 per hr.) | 4,471,040 | |
Fixed factory overhead costs | 2,813,700 | |
Variable factory overhead costs | 3,084,100 | |
Total actual costs | $ | 21,148,140 |
Required:
1. Compute the direct materials cost variance,
including its price and quantity variances.
2. Compute the direct labor cost variance, including its rate and efficiency variances.
3. Compute the overhead controllable and volume variances.
Solution 1:
Direct Material Cost Variance | ||||||||||||
Actual Cost | Standard cost for actual quantity | Standard Cost | ||||||||||
AQ * | AP = | AQ * | SP = | SQ * | SP = | |||||||
1711000 | $6.30 | $10,779,300.00 | 1711000 | $4.80 | $8,212,800.00 | 1809000 | $4.80 | $8,683,200.00 | ||||
$2,566,500.00 | U | $470,400.00 | F | |||||||||
Direct Material Price Variance | Direct Material Qty variance | |||||||||||
Direct material price variance | $2,566,500.00 | U | ||||||||||
Direct material quantity variance | $470,400.00 | F | ||||||||||
Direct material cost variance | $2,096,100.00 | U |
Solution 2:
Direct Labor Cost Variance | ||||||||||||
Actual Cost | Standard cost for actual quantity | Standard Cost | ||||||||||
AH * | AR = | AH * | SR = | SH * | SR = | |||||||
399200 | $11.20 | $4,471,040.00 | 399200 | $14.00 | $5,588,800.00 | 422100 | $14.00 | $5,909,400.00 | ||||
$1,117,760.00 | F | $320,600.00 | F | |||||||||
Direct Labor rate Variance | Direct Labor Efficiency Variance | |||||||||||
Direct Labor Rate variance | $1,117,760.00 | F | ||||||||||
Direct Labor Efficiency variance | $320,600.00 | F | ||||||||||
Direct labor cost variance | $1,438,360.00 | F |
Solution 3:
Controllable Variance | ||
Actual overhead | $5,897,800.00 | |
Budgeted overhead | $5,909,400.00 | |
Controllable variance | $11,600.00 | F |
Fixed overhead volume variance | ||
Budgeted fixed overhead | $3,376,800.00 | |
Fixed overhead cost applied | $3,798,900.00 | |
Fixed overhead volume variance | $422,100.00 | F |
Trico Company set the following standard unit costs for its single product. Direct materials (30 Ibs....
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 67,000 units per quarter. The following flexible budget information is...
Trico Company set the following standard unit costs for its single product. Direct materials (30 Ibs. @ $4.80 per Ib.) $ 144.00 Direct labor (7 hrs. @ $14 per hr.) 98.00 Factory overhead—variable (7 hrs. @ $6 per hr.) 42.00 Factory overhead—fixed (7 hrs. @ $9 per hr.) 63.00 Total standard cost $ 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...
Trico Company set the following standard unit costs for its single product. Direct materials (30 Ibs. @ $4.80 per Ib.) Direct labor (8 hrs. @ $16 per hr.) Factory overhead-variable (8 hrs. @ $9 per hr.) Factory overhead-fixed (8 hrs. @ $12 per hr.) Total standard cost $144.00 128.00 72.00 96.00 $440.00 The predetermined overhead rate is based on a planned operating volume of 80% of the productive capacity of 59.000 units per quarter. The following flexible budget information is...
Trico Company set the following standard unit costs for its single product. Direct materials (30 Ibs. @ $4.80 per Ib.) $ 144.00 Direct labor (6 hrs. @ $14 per hr.) 84.00 Factory overhead—variable (6 hrs. @ $7 per hr.) 42.00 Factory overhead—fixed (6 hrs. @ $9 per hr.) 54.00 Total standard cost $ 324.00 The predetermined overhead rate is based on a planned operating volume of 80% of the productive capacity of 57,000 units per quarter. The following flexible budget...
Trico Company set the following standard unit costs for its single product. Direct materials (30 Ibs. @ $5.00 per Ib.) $ 150.00 Direct labor (7 hrs. @ $14 per hr.) 98.00 Factory overhead—variable (7 hrs. @ $7 per hr.) 49.00 Factory overhead—fixed (7 hrs. @ $9 per hr.) 63.00 Total standard cost $ 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...
Trico Company set the following standard unit costs for its single product. Direct materials (30 Ibs. @ $5.10 per Ib.) $ 153.00 Direct labor (8 hrs. @ $14 per hr.) 112.00 Factory overhead—variable (8 hrs. @ $6 per hr.) 48.00 Factory overhead—fixed (8 hrs. @ $12 per hr.) 96.00 Total standard cost $ 409.00 The predetermined overhead rate is based on a planned operating volume of 80% of the productive capacity of 66,000 units per quarter. The following flexible budget...
Trico Company set the following standard unit costs for its single product. Direct materials (30 Ibs. @ $4.00 per Ib.) $ 120.00 Direct labor (7 hrs. @ $14 per hr.) 98.00 Factory overhead—Variable (7 hrs. @ $7 per hr.) 49.00 Factory overhead—Fixed (7 hrs. @ $11 per hr.) 77.00 Total standard cost $ 344.00 The predetermined overhead rate is based on a planned operating volume of 80% of the productive capacity of 63,000 units per quarter. The following flexible budget...
Trico Company set the following standard unit costs for its single product. Direct materials (29 Ibs. @ $3 per Ib.) $ 87.00 Direct labor (6 hrs. @ $6 per hr.) 36.00 Factory overhead—variable (6 hrs. @ $4 per hr.) 24.00 Factory overhead—fixed (6 hrs. @ $5 per hr.) 30.00 Total standard cost $ 177.00 The predetermined overhead rate is based on a planned operating volume of 70% of the productive capacity of 60,000 units per quarter. The...
Trico Company set the following standard unit costs for its single product. Direct materials (30 lbs. @ $4 per Ib.) Direct labor (5 hrs. @ $14 per hr.) Factory overhead-variable (5 hrs. @ $8 per hr.) Factory overhead-fixed (5 hrs. @ $10 per hr.) Total standard cost $120.00 70.00 40.00 50.00 $280.00 The predetermined overhead rate is based on a planned operating volume of 80% of the productive capacity of 60,000 units per quarter. The following flexible budget information is...
Trico Company set the following standard unit costs for its single product. Direct materials (30 Ibs. @ $5.10 per Ib.) Direct labor (8 hrs. @ $15 per hr.) Factory overhead-Variable (8 hrs. @ $6 per hr.) Factory overhead-Fixed (8 hrs. @ $9 per hr.) Total standard cost $ 153.00 120.00 48.00 72.00 $ 393.00 The predetermined overhead rate is based on a planned operating volume of 80% of the productive capacity of 65,000 units per quarter. The following flexible budget...