Trico Company set the following standard unit costs for its single product. Plea
ID: 2479774 • Letter: T
Question
Trico Company set the following standard unit costs for its single product.
Please answer
Trico Company set the following standard unit costs for its single product. Direct materials (23 lbs. $4.60 per lb.) Direct labor (5 hrs. @ $7.70 per hr.) Factory overhead-variable (5 hrs. @ $5.80 per hr.) Factory overhead-fixed (5 hrs. @ $7.40 per hr.) 105.80 38.50 29.00 37.00 Total standard cost $210.30 The predetermined overhead rate is based on a planned operating volume of 80% of the productive capacity of 66,000 units per quarter. The following flexible budget information is available Operating Levels 70% 46,200 231,000 90% Production in units Standard direct labor hours Budgeted overhead 52,800 264,000 59,400 297,000 Fixed factory overhead Variable factory overhead $1,953,600 $1,953,600 $ 1,953,600 $1,339,800 $1,531,200 $ 1,722,600 During the current quarter, the company operated at 70% of capacity and produced 46,200 units of product; actual direct labor totaled 229,900 hours. Units produced were assigned the following standard costs Direct materials (1,062,600 lbs. $4.60 per lb.) Direct labor (231,000 hrs. @ $7.70 per hr.) Factory overhead (231,000 hrs. $13.20 per hr.) $4,887,960 1,778,700 3,049,200 Total standard cost $ 9,715,860Explanation / Answer
Answer:a)
Variable overhead spending variance = AH (SR - AR)
= 229900 [ $5.80 - (1298935/229900)]
= 229900($5.80 - $5.65)
= $34485 F
Variable overhead efficiency variance = SR ( SH - AH)
=$5.80 ( 231000 - 229900)
= $6380 F
Answer: b)
Fixed overhead spending variance = AH (SR - AR)
= 229900 [$7.40 - (1900600/229900)]
= 229900($7.40 - $8.27)
= $200013 U
Fixed overhead volume variance = SR ( SH - AH)
= $7.40 (231000 - 264000)
= $244200 U
Answer:c)
Total variable overhead variance = $34485 F+$6380 F = $40865 F
Total Fixed overhead variance = $200013 U+$244200 U= $444213 U
Total overhead controllable variance = $444213 U+$40865 F= $403348 U
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