Question

W 13. Woods, Inc. budgeted the following overhead costs for the current year assuming operations at 80% of capacity, of 40,000 units Please show all your work. Attach a separate sheet to the exam if necessary. Total variable overhead .. Total fixed overhead. Total overhead. $240,000 560.000 $800,000 The standard cost per unit when operating at this same 80% capacity level is: con Direct materials (5 lbs. @ S4/lb.) ..... Direct labor (2 hrs. @ 58.75 hr.) ..... $20.00 17.50 Variable overhead (2 hrs. @ hrs. $3/hr.) ... 6.00 Fixed overhead (2 hrs. @ $7/hr.) ...... 14.00 Total cost per unit ... $57.50 The actual production achieved in the current year was 60% of capacity, or 30,000 units. The actual costs were: Direct materials (150,350 lbs.) ....... 5616,435 Direct labor (59,800 hrs.) ................... 520,260 Variable overhead ... 192,000 Fixed overhead 552,000 Calculate the following variances and indicate whether each is favorable or unfavorable. Direct materials: Price variance Quantity variance Direct labor: Rate variance Efficiency variance Variable overhead: Spending variance Efficiency variance Fixed overhead: Spending variance Volume variance

Answer 1

Poge Page Matenal variare PH ce Variance : Actual uantity consumed ( srandard Price-Acual Price) Variable Overhead So, 350 Jbs 4 1b - u b) Spending Varianee A ctual hours SRRIhour) -Actual Ouerheas Csgeoo hrs x$8/hr) - 1.g2.000 4ng.uco-4192.o0D 12.6.00 COnfauourable) $15.035 (Unfouourable) X where. Actual Price Achual Direct Mademal Co Actual uantity consumed Budgeted overheads Buda eted Hours 2.uo.000 6.16.u35 SRRIhour uo.co0x 2hYS 1So. SsD Ibs oniard Rate of Recove 3/hr 4 4.1/1b Eficiency vanance: SReIhY Std hsfor actuol output- Achual hr $3/hY X (30-000 x 2 - S9.800) $600 (Fatourable) Usage Variance : tondard Rate x ( gTandard Quoutity- A ctual duantity) 4/1bx (s 30,000 xs Ibs - sD,35 1bs 1.uoo (Unfavourable Axed Overhead Budaered ouerhead Actual ouerhead : $s160 000 $5.52.0o0 = 46,000 (Paoourable Direct kabour Spending Vaiance Rate Vanonce Actual Hours Pai d x (dndard Pate- Actual Rate) S9.800 hs xC 8.7slbr- e.7 I hr) $ 2.9g0 ( Favourable) Volume Variance= SRplunit x ( Budgeted Output Atual Output $1ulunit x (uo.000- So.00o 4990 0 Cfaourabie) heve, A ctual Rate $5.201260 $8.7/hr S9.s00 h where, SRRunit Budgeted OH Budgeted Output =$5.60.000 Siulunit Srandavd Rate a (8td Hours Actual Houvs paid $695/hrx (30,00ox2 -591800 hs 4 1.ns0 (Fauourable Efficiency vavionce uo o OD uns