The predetermined overhead rate is based on a planned operating volume of 80% of

Question

The predetermined overhead rate is based on a planned operating volume of 80% of the productive capacity of 53,000 units per quarter. The following flexible budget information is available.

During the current quarter, the company operated at 70% of capacity and produced 37,100 units of product; actual direct labor totaled 258,600 hours. Units produced were assigned the following standard costs:

Trico Company set the following standard unit costs for its single product. Required: (a) Compute the variable overhead spending and efficiency variances. (Round "cost per unit" and "rate per hour" answers to 2 decimal places.) Actual Variable OH Cost Flexible Budget Standard Cost (VOH applied) (b) Compute the fixed overhead spending and volume variances. (Round "cost per unit" and "rate per Round"cost per unit hour" answers to 2 decimal places.) Actual Fixed OH Cost Budgeted Overhead Standard Cost (FOH applied)

Explanation / Answer

Answer:a)

Variable overhead spending variance = AH (SR - AR)

= 258600 [ $4.60 - (1150700/258600)]

= 258600($4.60 - $4.45)

= $38790 F

Variable overhead efficiency variance = SR ( SH - AH)

=$4.60 ( 259700 - 258600)

= $5060 F

Answer: b)

Fixed overhead spending variance = AH (SR - AR)

= 258600 [$8 - (2321400/258600)]

= 258600($8 - $8.98)

= $253428 U

Fixed overhead volume variance = SR ( SH - AH)

= $8 (259700 - 296800)

= $296800U

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