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newconnect.mheducation.com Homewor O 0 Required information The following inform

ID: 2430417 • Letter: N

Question

newconnect.mheducation.com Homewor O 0 Required information The following information applies to the questions displeyed below) Trico Company set the following standard unit costs for its single product Direct materials (30 Ibs. $4.80 per Ib.) Direct labor (6 hrs.$14 per hr.) ractory overhead-variable (6 hrs.$7 per hr Tactory overhead-fixed (6 hrs. 59 per hr.) Total standard cost 144.00 4.00 2-00 324.00 The predetermined overhead rate is based on a planned operating volume of 80% of the productive capacity of 57000 units per quarter. The following flexible budget information is available 701 80 Production in units 9,900 45,600 51, 300 Standard direct labor hours 239,400 273,600 307,800 Budgeted overhead Fixed factory overhead $2,462,400 $2,462,400 $2-462,400 Variable factory overhead ,675,800 ,915,200 $2,154,600 During the current quarter, the company operated at 90% of capacity and produced 51,300 units of product, actual direct labor totaled 304,800 hours. Units produced were assigned the following standard costs. Direet materials (1,539,000 bs.$4.80 per tb.1 Direct labor (307,800 hrs.$14 per hr.) ractory overhead (307,800 hrs.? $16 per hr., -492.80. 4,309,200 Total standard cost 16,621,200 Actual costs incurred during the current quarter follow Direct naterials (1,519,000 Ibs. 57,30 per lb11,088,700 Direct 1abor (304,800 hrs.$13.00 per hr.) Fized factory overhead Fosts Variable factory overhead coatas Total actual COSES 962 400 2 337,000 2 182 800 19,575,900 Required 1. Compute the direct materials cost variance, including its price and quantity variances

Explanation / Answer

Solution 3:

Actual overhead incurred = $2,337,000 + $2,187,800 = $4,524,800

Budgeted overhead for actual production = (51300 * 6 * $7) + (45600 * 6 * $9) = $4,617,000

Controllable variance = Budgeted overhead - Actual overhead = $4,617,000 - $4,524,800 = $92,200 F

Budgeted fixed ovehead = 45600 * 6 * $9 =$2,462,400

Fixed overhead applied = Standard hours * Predetermined overhead rate = (51300*6) * $9 = $2,770,200

Fixed overhead volume variance = Fixed overhead applied - Budgeted fixed overhead

= $2,770,200 - $2,462,400 = $307,800 F