The predetermined overhead rate is based on a planned operating volume of 70% of

Question

   

  

The predetermined overhead rate is based on a planned operating volume of 70% of the productive capacity of 60,000 units per quarter. The following flexible budget information is available.

  

  

During the current quarter, the company operated at 80% of capacity and produced 48,000 units of product; actual direct labor totaled 477,000 hours. Units produced were assigned the following standard costs:

  

  

    

Trico Company set the following standard unit costs for its single product. Required 1. Compute the direct materials cost variance, including its price and quantity variances. Actual Cost Standard Cost

Explanation / Answer

Actual Cost Standard cost AP AQ SP AQ SP SQ 5.1 1291000 5 1291000 5 1296000 6584100 6455000 6455000 6480000 Material Price Variance (AQ*SP-AQ*AP) 129100 Unfav Material Qty Variance (SP*SQ-SP*AQ) 25000 Fav Material Cost variance 104100 Unfav

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