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Required information

[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 56,000 units per quarter. The following flexible budget information is available.

During the current quarter, the company operated at 90% of capacity and produced 50,400 units of product; actual direct labor totaled 299,400 hours. Units produced were assigned the following standard costs.

Actual costs incurred during the current quarter follow.

Direct materials (30 Ibs. @ $5.10 per Ib.) $ 153.00 Direct labor (6 hrs. @ $15 per hr.) 90.00 Factory overhead—variable (6 hrs. @ $7 per hr.) 42.00 Factory overhead—fixed (6 hrs. @ $11 per hr.) 66.00 Total standard cost $ 351.00 (a) Compute the variable overhead spending and efficiency variances. (Round "cost per unit" and "rate per hour" answers to 2 decimal places.) AH Actual Hours SH Standard Hours AVR Actual Variable Rate SVR Standard Variable Rate Actual Variable OH Cost Flexible Budget Standard Cost (VOH applied) AVR SH 299,400 S 8.14 299,400 S 7.00 302,400 S 7.00 2,438,500 2,095,800 2,116,800 S 21,000 342,700 Variable overhead spending variance Variable overhead efficiency variance Variable overhead spending variance 342,700Unfavorable 21,000 Favorable 321,700 Unfavorable

Explanation / Answer

Answer 1. Actual Variable OH Cost Flexible Budget Standard Cost AH X AVR AH X SR SH X SR              299,400 X                     8.14              299,400 X                     7.00                  302,400 X                       7.00    2,438,500.00    2,095,800.00      2,116,800.00        342,700.00            21,000.00 Variable Overhead Spending Variance        342,700.00 (U) Variable Overhead Efficiency Variance          21,000.00 (F) Total Variable Overhead Variance        321,700.00 (U) Answer 2. Actual Fixed OH Cost Budget Overhead Standard Cost (FOH Applied) AH X AFR SH X SFR        299,400.00 X                     8.70            302,400.00 X                    11.00    2,604,700.00    2,956,800.00      3,326,400.00        352,100.00         369,600.00 Fixed Overhead Spending Variance        352,100.00 (F) Fixed Overhead Volume Variance        369,600.00 (F) Total Fixed Overhead Cost Variance        721,700.00 (F) Answer 3. Variable Overhead Spending Variance        342,700.00 (U) Variable Overhead Efficiency Variance          21,000.00 (F) Fixed Overhead Spending Variance        352,100.00 (F) Fixed Overhead Volume Variance        369,600.00 (F) Total Overhead Controllable Variance        400,000.00 (F)

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