Parker Plastic, Inc., manufactures plastic mats to use with rolling office chair

Question

Parker Plastic, Inc., manufactures plastic mats to use with rolling office chairs. Its standard cost information for la Standard Standard QuantityStandard Price (Rate) 15 sq ft. 0.90 per sq. ft. Unit $13.50 Direct materials (plastic) Direct labor Variable manufacturing overhead (based on 0.25 hr 3.15 0.45 0.58 0.25 hr$12.60 per hr 1.80 per hr. 1.80 per hr direct labor hours) Fixed manufacturing overhead $539,400+ 930,000 units) Parker Plastic had the following actual results for the past year Number of units produced and sold Number of square feet of plastic used Cost of plastic purchased and used Number of labor hours worked Direct labor cost Variable overhead cost Fixed overhead cost 1,240,000 12,400,000 $ 9,920,000 328,000 $3,968,800 $ 1,350,000 $ 385,000 Required: Calculate Parker Plastic's variable overhead rate and efficiency variances and its over- or underapplied variable o variance by selecting "F" for FavorablelOverapplied and "U for Unfavorable/Underapplied.) $ 557,600U Variable Overhead Rate Variance Variable Overhead Efficiency Variance Variable Overhead Spending Variance

Explanation / Answer

Aactual output: 1240000 Std labour hours per unit of output: 0.25 hr Std labour hourrs : (1240000*0.25)= 310000 hours Actual labour hours: 328000 Std variable OH rate per hour: 1.80 per hour Actual Variable OH rate per hour: (1350000 /328000)= 4.12 per hour Variable OH rate variance = Actual hours (Std OH rate-Actual OH rate) 328000 (1.80 -4.12) = 759600 Unfav Variable OH efficiency Variance = Std OH rate (Std hours-Actual Hours) 1.80 (310000-328000)= $ 32400 Unfav Variable Sspending Variance: Std hours*Std OH rate -Actual hours*Actual OH rate 310000*1.80 - 1350000 = $ 792000 Unfav

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