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 a:

Variable Overhead Cost Variance
Actual Cost					Standard cost for actual quantity					Standard Cost
AH *	AR =				AH *	SR =				SH *	SR =
316300	$8.67	$2,742,200.00			316300	$7.00	$2,214,100.00			384300	$7.00	$2,690,100.00
			$528,100.00	Unfavorable				$476,000.00	Favorable
			Variable overhead rate variance					Variable overhead efficiency variance
Variable overhead rate variance					$528,100.00	Unfavorable
Variable overhead efficiency variance					$476,000.00	Favorable
Variable overhead cost variance					$52,100.00	Unfavorable

Solution b:

Fixed Overhead Cost Variance

Actual Fixed OH Cost

Budgeted Fixed Overhead

Standard Cost (FOH Applies)

SH*

BR

$2,348,400.00

$3,074,400.00

384300

$9.00

$3,458,700.00

$726,000.00

Favorable

$384,300.00

Favorable

Fixed overhead Budget Variance

Fixed overhead volume variance

Fixed overhead Budget Variance

$726,000.00

Favorable

Fixed overhead volume variance

$384,300.00

Favorable

Total Fixed overhead variance

$1,110,300.00

Favorable

Solution c:

Overhead controllable variance
Variable Overhead rate Variance	$528,100.00	U
Variable overhead efficiency variance	$476,000.00	F
Fixed overhead spening variance	$726,000.00	F
Overhead controllable variance	$673,900.00	F