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 last year follows: Standard Quantity Standard Price (Rate) 13 sqft $ 0.93 per sq. ft. 0.3 hr Standard Unit Cost 3.27 0.72 S12.09 Direct materials (plastic) Direct labor Variable manufacturing overhead (based on 3hr 5 10.90 per hr. 5 2.40 per hr. direct labor hours Fixed manufacturing overhead $364,800- 912,000 units) 0.40 Parker Plastic had the tollowing actual results for the past year: Number of units produced and sold Number of square feet of plastic used Cost of plastic purchased and Number of labor hours worked Direct labor cost Variable overhead cost Fixed overhead cost 1060,000 11,500,000 $ 10,350,000 310,000 $ 3,565,000 $ 780,000 $367,000 used Required Calculate Parker Plastic's variable overhead rate and eficiency variances and its over- or underapplied variable overhead. (Do not round intermediate calculations. Indicate the effect of each variance by selecting "F" for Favorable/Overapplied and "U" for Unfavorable/Underapplied.) Variable Overhead Rate Variance Variable Overhead Efficiency Variance Variable Overhead Spending Variance

Explanation / Answer

Variable overhead rate variance = (2.4*310000-780000) = 36000 U

Variable overhead efficiency variance = (1060000*.30-310000)*2.4 = 19200 F

Variable overhead cost variance = (1060000*0.72)-780000 = 16800 U

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