Question

I have completed 1and 2, but I need help with number 3 (compute overhead controllable volume variances)

Required information [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.$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 $ 144.0 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 6400 units per quarter. The following flexible budget information is available. ng Leve 90% Production in units Standard direct labor hours Budgeted overhead Fixed factory overhead Variable factory overhead 44,800 313,600358,400 1,200 57,600 $3,225,600 $3,225,600 3,225,600 $1,881,6e0 52,150,400 $2,419,200 During the current quarter, the company operated at 90% of capacity and produced 57600 units of product actual direct labor totaled 400.200 hours. Units produced were assigned the following standard costs Direct materials (1,728,000 Ibs. $4.80 per Ib.) 8,294,400 5,644,800 6,048,000 $19,987,200 Direct labor (403,200 hrs. $14 per hr.) Factory overhead (403, 200 hrs. @$15 per hr.) Total standard cost Actual costs incurred during the current quarter follow Direct materials (1,715,000 Ibs. @$6.30 per lb.) Direct labor (400,200 hrs. $11.00 per hr.) Fixed factory overhead costs Variable factory overhead costs Total actual costs $10,804,500 4,402,200 2,813,8060 2,634,200 $20,654,700 Required 1. Compute the direct materials cost variance, including its price and quantity variances. Answer is complete and correct. Actual Cost Standard Cost Actual Actual Actual quantity ,715,000 Standard Standard Standard price quantity price s 6.30 quantity I 1.728,000 price 1.715,000 4.80 4.80 10,804,500 8,232,000 8,294,400 $ 62,400 2,572,500 Direct materials price variance 2.572.500 62,400- 2,510,100Unfavorable Unfavorable Direct materials quantity variance Favorable Total direct materials variance 2. Compute the direct labor cost variance, Including its rate and efficiency variances. Answer is complete and correct. Actual Cost Standard Cost Actual hours Actual Actual Standard Standard hours 400,200 Standard rate rate hours rate 400,200 14.00 11.00 403,200 14 00 4,402,200 5.602,800 5 644,800 1,200,600 42,000 Direct labor rate variance Favorable 1,200,600 Direct labor efficiency variance 42,000 Favorable Favorable Total direct labor variance 1,242,600 3. Compute the overhead controllable and volume variances. Answer is complete but not entirely correct. Controllable Variance 5,448,000 Actual overhead Budgeted overhead $ 6,128,640 Controllable variance 680,640Favorable

Answer 1

3. Computation of Overhead controllable and volume variances :-
	Controllable Variance
	Actual overhead (2,813,800+2,634,200)			$      5,448,000
	Budgeted overhead (3225600+2419200)			$      5,644,800
	Controllable Variance			$         196,800	Favorable
	Fixed Overhead volume variance
	Budgeted Fixed Overhead			$      3,225,600
	Fixed Overhead Applied                                   [(57600 units*7 hours)*$9]			$      3,628,800
	Fixed Overhead volume variance			$         403,200	Favorable

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