Help Save & Ch Trico Company set the following standard unit costs for its singl

Question

Help Save & Ch Trico Company set the following standard unit costs for its single product Direct materials (30 Ibs. $4.90 per Ib.) Direct labor (4 hrs. $16 per hr.) Factory overhead-variable (4 hrs. $6 per hr.) Factory overhead-fixed (4 hrs. e $10 per hr.) Total standard cost $147.00 64.00 24.00 40.00 $275.00 The predetermine 53,000 units per quarter. The following flexible budget information is available. d overhead rate is based on a planned operating volume of 80% of the productive capacity of Operating Levela Production in units Standard direct labor hours Budgeted overhead 808 42,400 148, 400169,600190,800 70% 37,100 90% 47,700 Fixed factory overhead Variable factory overhead $1,696,000 $1,696,000 $1,696,000 890,400 $1,017,600 $1,144,800 During the current quarter, the company operated at 90% of capacity and produced 47,700 units of product, actual direct labor totaled 185,800 hours. Units produced were assigned the following standard costs. Direct materials (1,431,000 Ibs. e $4.90 per Ib.) Direct labor (190,800 hrs. e $16 per hr.) Factory overhead (190,800 hrs. $16 per hr.) 3,052,800 Total standard cost s 7,011,900 3, 052, Bo0 $13,117,500

Explanation / Answer

Requirement a: VOH Spending & Efficiency Variances: Actual Hours, AH 185800 Standard Hours, SH 190800 Actual Variable Rate, AVR 6.903659849 (1282700/185800) Standard Variable Rate, SVR 6 Standard Cost (VOH Applied) A SH 190800 B SVR 6 C Standard Cost (VOH Applied) 1144800 Actual Variable OH Cost A AH 185800 B AVR 6.903659849 C Actual Variable OH Cost (A*B) 1282700 Flexible Budget: A AH 185800 B SVR 6 C Flexible Budget (A*B) 1114800 Variable Overhead Spending Variance A Flexible Budget 1114800 B Actual VOH 1282700 C Variable Overhead Spending Variance (A-B) -167900 Variable Overhead Efficiency Variance A Standard VOH 1144800 B Flexible Budget 1114800 C Variable Overhead Efficiency Variance (A-B) 30000 Variable Overhead Spending Variance -167900 Unfavorable Variable Overhead Efficiency Variance 30000 Favorable Total Variable Overhead Variance -137900 Unfavorable Requirement b: Fixed Overhead Spending Volume Variances Actual Hours, AH 185800 Standard Hours, SH 190800 Actual Fixed Rate, AFR 7.096340151 (1318500/185800) Standard Fixed Rate, SFR 10 Standard Cost (FOH Applied) A SH 190800 B SFR 10 C Standard Cost (FOH Applied) (A*B) 1908000 Actual Fixed OH Cost A AH 185800 B AFR 7.096340151 C Actual Fixed OH Cost (A*B) 1318500 Budgeted Overhead 1696000 Fixed Overhead Spending Variance A Budgeted Overhead 1696000 B Actual Fixed OH Cost 1318500 C Fixed Overhead Spending Variance (A-B) 377500 Fixed Overhead Volume Variance A Standard Cost 1908000 B Budgeted Overhead 1696000 C Fixed Overhead Volume Variance (A-B) 212000 Fixed Overhead Spending Variance 377500 Favorable Fixed Overhead Volume Variance 212000 Favorable Total Fixed Overhead Variance 589500 Favorable

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