Please show work and explain, thank you Trico Company set the following standard
ID: 2449688 • Letter: P
Question
Please show work and explain, thank you
Trico Company set the following standard unit costs for its single product. Direct materials (26 lbs.@ $4.70 per lb.) Direct labor (6 hrs. @ $8.80 per hr.) Factory overhead-variable (6 hrs. @ $5.10 per hr.) Factory overhead-fixed (6 hrs. @ $7.40 per hr.) $122.20 52.80 30.60 44.40 Total standard cost $ 250.00 The predetermined overhead rate is based on a planned operating volume of 80% of the productive capacity of 51,000 units per quarter. The following flexible budget information is available Operating Levels 90% Production in units Standard direct labor hours Budgeted overhead OPI 35,700 214,200 80% 40,800 244,800 45,900 275,400 Fixed factory overhead Variable factory overhead $ 1,811,520 $1,811,520 $ 1,811,520 $1,092,420 $1,248,480 $ 1,404,540 During the current quarter, the company operated at 70% of capacity and produced 35,700 units of product; actual direct labor totaled 212,200 hours. Units produced were assigned the following standard costs Direct materials (928,200 lbs. $4.70 per lb.) Direct labor (214,200 hrs. @ $8.80 per hr.) Factory overhead (214,200 hrs. $12.50 per hr.) $ 4,362,540 1,884,960 2,677,500 Total standard cost $ 8,925,000Explanation / Answer
(1) Variable spending variane = ( std rate - actual rate) Actual hrs
= ( 4.95 - $5.10 ) 212,200
= $31,830(F)
(2) Variable effiicency varaince = ( Std hrs for actual production - actual hrs) Std rate
= ( 6* 35,700 - 212,200) $5.10
= (214,200 - 212,200) 5.10
= 10,200(F)
Fixed overhead spending variance = Acual - budgeted overhead
= 1,759,520 - 1,811,520
= $52,000(F)
Fixed overhead voulme vairanc e= ( Std hr for actual prodcution - actual hrs ) std rate
= (214,200 - 212,200 ) 7.4
= $14,800(F)
(c) Total overhead controllable variance
= Actual overhead expense - ( Budgeted overhead per unit * std number of units)
= 2809,910 - 2,677,500
= $132,410(U)