Trico Company set the following standard unit costs for its single product. Dire
ID: 2491673 • Letter: T
Question
Trico Company set the following standard unit costs for its single product. Direct materials (21 lbs. $4.00 per lb.) Direct labor (5 hrs.@ $8.00 per hr.) Factory overhead-variable (5 hrs. $4.50 per hr.) Factory overhead-fixed (5 hrs. $7.40 per hr.) $ 84.00 40.00 22.50 37.00 Total standard cost $183.50 The predetermined overhead rate is based on a planned operating volume of 80% of the productive capacity of 57,000 units per quarter. The following flexible budget information is available Operating Levels 80% 45,600 228,000 90% Production in units Standard direct labor hours Budgeted overhead 70% 39,900 199,500 51,300 256,500 Fixed factory overhead Variable factory overhead $1,687,200 $1,687,200 $1,687,200 $ 897,750 $1,026,000 $1,154,250 During the current quarter, the company operated at 70% of capacity and produced 39,900 units of product. actual direct labor totaled 198,300 hours. Units produced were assigned the following standard costs Direct materials (837,900 lbs. @ $4.00 per lb.) Direct labor (199,500 hrs. $8.00 per hr.) Factory overhead (199,500 hrs. $11.90 per hr.) $ 3,351,600 1,596,000 2,374,050 Total standard cost $ 7,321,650 Actual costs incurred during the current quarter follow: Direct materials (795,900 Ibs. $4.30 per lb.) $3,422,370 Direct labor (198,300 hrs. @ $7.79 per hr.) Fixed factory overhead costs Variable factory overhead costs 1,544,757 1,635,200 862,605 Total actual costs $ 7,464,932Explanation / Answer
Answer: a)
Explanation:
Variable overhead spending variance = Flexible budget - Actual variable OH cost
Variable overhead efficiency variance = Standard cost (VOH applied) - Flexible budget
Total variable overhead variance = Variable overhead spending variance + Variable overhead efficiency variance
AVR = Actual variable overhead cost / Actual DLH
AVR at 70% capacity = $862605 / 198300 DLH = $4.35 per DLH
Answer: b)
Explanation:
Fixed overhead spending variance = Budgeted overhead - Actual fixed OH cost
Fixed overhead volume variance = Standard cost (FOH applied) - Budgeted overhead
Total Fixed overhead cost variance = Fixed overhead spending variance + Fixed overhead volume variance
AFR = Actual Fixed overhead cost / Actual DLH
AFR at 70% capacity = $1635200 / 198300 DLH = $8.25 per DLH
Answer: c)
Explanation:
Total overhead controllable variance = Variable overhead spending variance + Variable overhead efficiency variance + Fixed overhead spending variance
Actual Variable OH cost Flexible Budget Standard Cost (VOH applied) AH x AVR AH x SVR SH x SVR 198300 x $ 4.35 198300 x $ 4.50 199500 x $ 4.50 $ 8,62,605.00 $ 8,92,350.00 $ 8,97,750.00 $ 29,745.00 $ 5,400.00 Variable overhead spending variance $ 29,745.00 Favourable Variable overhead efficiency variance $ 5,400.00 Favourable Total variable overhead variance $ 35,145.00 FavourableRelated Questions
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