(The following information applies to the questions displayed below Trico Compan

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(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. $4.80 per Ib.) $144.00 Direct labor (7 hrs. $14 per hr.) Factory overhead-variable (7 hrs. $6 per hr.) Factory overhead-fixed (7 hrs. $9 per hr 63.00 Total standard cost 98.00 42.00 347.00 The predetermined overhead rate is based on a planned operating volume of 80% of the productive capacity of 67,000 units per quarter. The following flexible budget information is available. Operating Levels 80% 76% 46,90053,600 Production in units Standard direct labor hours Budgeted overhead 60,300 328,300 375,20 422,100 Fixed factory overhead $3,376,800 $3,376,800 $3,376,800 Variable factory overhead $1,969,800 $2,251,200 $2,532,600 During the current quarter, the company operted at 90% of capacity and produced 60,300 units of product, actual direct labor totaled 399,200 hours. Units produced were assigned the following standard costs K Prev 6 of 13 Next>

Explanation / Answer

1) Direct Material cost variance = DMPV + DMQV = 2566500U + 470400F = 2096100U DMPV = (actual price - std. price ) actual usage = (6.30 - 4.80)1711000 = 2566500 U DMQV = (std. usage of actual - actual usage) std. price = (1809000 - 1711000)*4.80 = 470400 F 2) Direct Labor cost variance = DLRV + DLEV = 1117760 F + 320600F = 1438360F DLRV = (actual rate - std. rate ) actual hours = (11.20-14)*399200 = 1117760F DLEV = (std. hours of actual - actual hours) std. rate = (422100 - 399200)*14 = 320600 F 3a) Overhead controllable variance = Actual overhead - (Fixed budgeted overhead + std hours for actual * std. variable o/h rate) = (2813700+3084100) - (3376800 + 60300*7*6)=11600 F 3b) Fixed overhead volume variance = (actual units * std. fixed overhead rate) - Budgeted Fixed Overheads = (60300 *7 * 9) - 3376800 = 422100 U

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