Use the following information for the Problems below. [The following information
ID: 2528424 • Letter: U
Question
Use the following information for the Problems below.
[The following information applies to the questions displayed below.]
Trico Company set the following standard unit costs for its single product.
The predetermined overhead rate is based on a planned operating volume of 80% 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 90% of capacity and produced 54,000 units of product; actual direct labor totaled 265,000 hours. Units produced were assigned the following standard costs.
Actual costs incurred during the current quarter follow.
Explanation / Answer
Solution a:
Variable overhead spending variance = Variable overhead rate variance + Variable overhead efficiency variance
= $80,000 U + $40,000 F = $40,000 U
Solution b:
Fixed overhead spending variance = Budgeted fixed overhead - Actual fixed overhead
= $2,400,000 - $2,350,000 = $50,000 F
Fixed overhead volume variance = Fixed overhead applied - Budgeted fixed overhead
= (54000 * 5* $10) - $2,400,000 = $300,000 F
Solution c:
Total overhead controllable variance = Variable overhead spending variance + Fixed overhead spending variance
= $40,000 U + $50,000 F = $10,000 F
Variable overhead Cost Variance Actual Variable OH Cost Flexible Budget Standard Cost AH* AR = AH* SR = SH * SR = 265000 $8.3019 $2,200,000.00 265000 $8.00 $2,120,000.00 270000 $8.00 $2,160,000.00 $80,000 U $40,000 F Varaible overhead rate Variance Variable overhead efficiency variance