The following Information applies to the questions displayed below. Trico Compan
ID: 2562685 • Letter: T
Question
The following Information applies to the questions displayed below. Trico Company set the following standard unit costs for its single product. Direct materials (28 lbs. @$5 per lb.) Direct labor (10 hrs. @ $10 per hr.) Factory overhead-variable (10 hrs.@ $6 per hr.) Factory overhead-fixed (10 hrs. $9 per hr) $140.00 100.00 60.00 90.00 Total standard cost $390.00 The predetermined overhead rate is based on a planned operating volume of 80% of the productive capacity of 70,000 units per quarter. The following flexible budget information is available Operating Levels 70% 49,000 490,000 80% 56,000 560,000 90% Production in units Standard direct labor hours Budgeted overhead 63,000 630,000 Fixed factory overhead Variable factory overhead $5.040,000 $5.040,000 $5.040,000 $2,940,000 $3,360,000 3.780,000 During the current quarter, the company operated at 90% of capacity and produced 63,000 units of product actual direct labor totaled 626,000 hours. Units produced were assigned the following standard costs: Direct materials (1,764,000 lbs. $5 per lb.) Direct labor (630,000 hrs. @ $10 per hr.) Factory overhead (630,000 hrs.@ $15 per hr.) $8,820,000 6,300,000 9,450,000 Total stanclard cost 24,570,000Explanation / Answer
1) Actual cost Actual quantity at Standard Price Standard cost AQ x AP AQ x SP SQ x SP 1759000 x 5.1 1759000 x 5.0 1764000 x 5.0 8970900 8795000 8820000 175900 25000 Direct material price variance 175900 [U] Direct material quantity variance 25000 [F] Direct material cost variance 150900 [U] 2) Actual cost Actual hours at Standard rate Standard cost AH x AR AH x SR SH x SR 626000 x 9.75 626000 x 10.0 630000 x 10.0 6103500 6260000 6300000 156500 40000 Direct labor rate variance 156500 [F] Direct labor efficiency variance 40000 [F] Direct labor cost variance 196500 [F]