Question

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 information is available. Operating Levels 70% 80% 45,500 52,000 364,000 416,000 90% 58,500 468,000 Production in units Standard direct labor hours Budgeted overhead Fixed factory overhead Variable factory overhead $3,744,000 $3,744,000 $3,744,000 $2,184,000 $2,496,000 $2,808,000 During the current quarter, the company operated at 90% of capacity and produced 58,500 units of product, actual direct labor totaled 465,000 hours. Units produced were assigned the following standard costs. Direct materials (1,755,000 lbs. @ $5.10 per Ib.) Direct labor (468,000 hrs. @ $15 per hr.) Factory overhead (468,000 hrs. @ $15 per hr.) Total standard cost $ 8,950,500 7,020,000 7,020,000 $22,990,500

Answer 1

Minor answer might be diferent due to the rounding.

	Minus sign indicate unfavorable variance.
	Measure	Hour
	Standard variable overhead rate per Hour	$                6.00
3104200/465000	Actual variable overhead rate per Hour	$                6.68
8*58500	Standard Hours	468000
	Actual Hours	465000
	Standard variable overhead rate per Hour	6.00
Less	Actual variable overhead rate per Hour	-6.68
	Difference	-0.68
Multiply	Actual Hours	465000
	Variable overhead spending variance	$       (314,200)
	Indicate	Unfavorable
	Standard Hours	468000
Less	Actual Hours	-465000
	Difference	3000
Multiply	Standard variable overhead rate per Hour	6.00
	Variable overhead efficiency variance	$           18,000
	Indicate	Favorable

Minus sign indicate unfavorable variance.
Budgeted Fixed Overheads	3744000
Actual Fixed Overheads	3315800
Budgeted units (65000*80%)	52000
Actual units	58500
Overhead rate =( Budgeted Fixed Overheads / Budgeted units)
Applied Fixed Overhead = (Budgeted Fixed Overhead Rate * Actual units)
Budgeted Fixed Overhead Rate (3744000/52000)	$                  72.00
Applied Fixed Overhead (72*58500)	4212000
Less: Budgeted Fixed Overheads	-3744000
Fixed Overhead Volume Variance	$              468,000
Indicate	Favorable
Budgeted Fixed Overheads	3744000
Less: Actual Fixed Overheads	-3315800
Fixed Overhead spending Variance	$              428,200
Indicate	Favorable

XIA 5 2020-09(3) SEP.xlsx - Microsoft Excel ? X FILE HOME INSERT PAGE LAYOUT FORMULAS DATA REVIEW VIEW DEVELOPER Sign in E49 : f с D E F G Н. K L M NA 23 Flexible budget Standard variable costs х Standard hours х Standard rate $ 6.00 Standard rate $ 6.00 х 468,000 X 2,808,000 2,790,000 18,000 Favorable 24 25 Actual Variable OH cost 26 Actual hours х Actual variable rate Actual hoi 27 465000 х 6.68 465000 28 3,104,200 29 314,200 30 Unfavorable 31 32 Variable overhead spending variar 314,200 Unfavorable 33 Variable overhead efficiency varia 18,000 Favorable 34 Total variable overhead variance 296,200 Unfavorable 35 36 37 Actual fixed OH cost 38 Actual units х Actual fixed rate (3315800/465000) 39 465000 х 7.1307527 40 3,315,800 41 428,200 42 Please round the actual fixed rate if you want. Favorable 43 44 Fixed Overhead spending Variance 428,200 Favorable 45 Fixed Overhead Volume Variance 468,000 Favorable 46 Total fixed overhead variance 896,200 Favorable 47 Budgeted overhead Standard fixed costs Standard hours х Standard rate $ 9.00 468,000 X 4,212,000 3,744,000 468,000 468,000 48 49 50 Activate Windows Go to Settings to activate Windows, Sheet31 Sheet32 Sheet33 Sheet34 Sheet35 Sheet36 Sheet37 Sheet38 Sheet39 + READY + + 100% i Search the web and Windows O ENG US 03:01 26-09-20

Summary of Answer
Variable Overhead
Fixed Overhead spending Variance	428,200	Favorable
Variable overhead efficiency variance	18,000	Favorable
Variable overhead spending variance	314,200	Unfavorable
Total overhead controllable variable	132,000	Favorable