Trico Company set the following standard unit costs for its single product. Dire

Q: Trico Company set the following standard unit costs for its single product. Dire

Solution: budgeted fixed overehead = $1,200,000 Actual fixed overhead = $2,332,264 Fixed overhead controllable variance = Actual overhead - Budgeted overhead = $2,332,264 - $1,200,000 = $1,132,264 U Fixed overhead cost applied =$2,400,000 Fixed overhead volume variance = Budgeted fixed overhead - fixed overhead cost applied = $1,200,000 - $2,430,000 = $1,230,000 U

ID: 2544851 • Letter: T

Question

Trico Company set the following standard unit costs for its single product. Direct materials (27 lbs. $3 per lb.) Direct labor (6 hrs. @ $6 per hr.) Factory overhead-variable (6 hrs. $4 per hr.) Factory overhead-fixed (6 hrs. $5 per hr) $ 81.00 36.00 24.00 30.00 Total standard cost $ 171.00 The predetermined overhead rate is based on a planned operating volume of 80% of the productive capacity of 50,000 units per quarter. The following flexible budget information is available Operating Levels 70% 35,000 210,000 80% 40,000 240,000 90% Production in units Standard direct labor hours Budgeted overhead 45,000 270,000 Fixed factory overhead Variable factory overhead $1,200,000 1,200,000 $1,200,000 $ 840,000 $960,000 $ 1,080,000 During the current quarter, the company operated at 90% of capacity and produced 45,000 units of product; actual direct labor totaled 263,000 hours. Units produced were assigned the following standard costs: Direct materials (1,215,000 lbs. $3 per lb.) Direct labor (270,000 hrs. $6 per hr.) Factory overhead (270,000 hrs. $9 per hr.) $ 3,645,000 1,620,000 2.430,000 Total standard cost S 7,695,000 Actual costs incurred during the current quarter follow: Direct materials (1,210,000 lbs. $3.10 per lb.) Direct labor (263,000 hrs. $5.75 per hr,) Fixed factory overhead costs Variable factory $ 3,751,000 1512,250 2,332,264 2,183,396 overhead costs Total actual costs $9,778,910

Explanation / Answer

Solution:

budgeted fixed overehead = $1,200,000

Actual fixed overhead = $2,332,264

Fixed overhead controllable variance = Actual overhead - Budgeted overhead

= $2,332,264 - $1,200,000 = $1,132,264 U

Fixed overhead cost applied =$2,400,000

Fixed overhead volume variance = Budgeted fixed overhead - fixed overhead cost applied

= $1,200,000 - $2,430,000 = $1,230,000 U

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Trico Company set the following standard unit costs for its single product. Dire

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Trico Company set the following standard unit costs for its single product. Dire

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