12 sq ft. S 1.45 per sq ft 03 hr $17.40 S 11.90 per ht. 2.30 per hr Direct labor
ID: 2396281 • Letter: 1
Question
12 sq ft. S 1.45 per sq ft 03 hr $17.40 S 11.90 per ht. 2.30 per hr Direct labor 3.57 0.69 0.50 (based on03 h direct labor hours 922000 units) of units produced and sold 1,160,000 12,000,000 S 16,800,000 320,000 $ 3,744.000 $ 1,100,000 S 377,000 cost cost Re Calculate Parker Plastic's variable overhead rate and efficiency variances and its over- or underapplied variable overhead (Do not round ettect of each variance by selecting "F" tor Favorable/Overapplied and "U" for Unfavorable/Underapplied.) OverheadExplanation / Answer
Solution:
Standard direct labor hours for actual production = 1160000*0.3 = 348000 hours
Actual direct labor hours used = 320000 hours
Standard rate of variable overhead = $2.30 per hour
Actual rate of variable overhead = $1,100,000 / 320000 = $3.4375 per hour
Variable overhead rate variance = (SR - AR) * AH = ($2.30 - $3.4375)* 320000 = $364,000 U
Variable overhead efficiency variance = (SH - AH) * SR = (348000 - 320000) * $2.30 = $64,400 F
Underapplied overhead (Variable overhead spending variance) = $364,000 U + 64,400 F = $299,600 U
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