[The following information applies to the questions displayed below.] Trico Comp

Question

[The following information applies to the questions displayed below.]

Trico Company set the following standard unit costs for its single product.

The predetermined overhead rate is based on a planned operating volume of 80% of the productive capacity of 55,000 units per quarter. The following flexible budget information is available.

During the current quarter, the company operated at 90% of capacity and produced 49,500 units of product; actual direct labor totaled 292,000 hours. Units produced were assigned the following standard costs.

Actual costs incurred during the current quarter follow.

Direct materials (30 Ibs. @ $4.40 per Ib.) $ 132.00 Direct labor (6 hrs. @ $14 per hr.) 84.00 Factory overhead—variable (6 hrs. @ $9 per hr.) 54.00 Factory overhead—fixed (6 hrs. @ $12 per hr.) 72.00 Total standard cost $ 342.00

Explanation / Answer

Direct material price variance (Actual price- standard price)*AQ purchased (7.40-4.40)*1,474,000 4422000 U Dirct material quantity variance (AQ used - std qty allowed)*standard rate (1,474,000 - 1,485000)*4.4 48400 F Direct material cost variance 4373600 U

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