Please help with this problem PROBLEM SET A Trico Company set the following stan
ID: 2582070 • Letter: P
Question
Please help with this problem
PROBLEM SET A Trico Company set the following standard unit costs for its single product. Problem 21-1A Direct materials (30 lbs.@$4 per lb.) Direct labor (5 hrs. $14 per hr.) Factory overhead-variable (5 hrs. $8 per hr.) Factory overhead-fixed (5 hrs. $10 per hr.) Total standard cost . $120.00 70.00 40.00 50.00 . $280.00 Computation of materials, labor, and overhead variances P2 P3 mhhe.com/wildFINMAN5e The predetermined overhead rate is based on a planned operating volume of 80% of the productive capac- ity of 60,000 units per quarter. The following flexible budget information is available. Levels 70% 80% 90% Production in units Standard direct labor hours Budgeted overhead 42,000 210,000 48,000 240,000 54,000 270,000 Fixed factory overhead Variable factory overhead $2,400,000 $2,400,000 $2,400,000 $1,680,000 $1,920,000 $2,160,000 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: $ 6,480,000 3,780,000 4,860,000 $15,120,000 Direct materials (1,620,000 lbs. $4 per lb.).... $18 per hr.)... Factory overhead (270,000 hrs. Total standard cost Actual costs incurred during the current quarter follow Fixed factory overhead costs Variable factory overhead costs Total actual costs . 2,350,000 . $14,815,250 Required 1. Compute the direct material Check (1) Materials variances: Price, $161,500 U; Quantity, $20,000 F s cost variance, including its price and quantity variances. 2) Labor variances: Rate,2. Compute the direct labor variance, including its rate and efficiency variances. $66,250 F: Efficiency, $70,000 F 3. Compute the overhead controllable and volume variances.Explanation / Answer
Answer Part 1. Direct Material Cost Variances: Units Cost Total Actual Units at actual Cost 1,615,000 4.10 6,621,500 Standard Units at standard cost 1,620,000 4.00 6,480,000 Direct Material Cost Variance 141,500 (U) Direct Materials Price & Quantity Variances: Units Cost Total Actual Quantity at Actual Price 1,615,000 4.10 6,621,500 Actual Quantity at Standard Price 1,615,000 4.00 6,460,000 Price Variance 161,500 (U) Actual Quantity at Standard Price 1,615,000 4.00 6,460,000 Standard Quantity at Standard Price 1,620,000 4.00 6,480,000 Quantity Variance 20,000 (F) Price Variance 161,500 (U) Quantity Variance 20,000 (F) Total Material Variance 141,500 (U) Answer Part 2. Direct Labor Cost Variances: Hours Cost Total Actual Units at actual Cost 265,000 13.75 3,643,750 Standard Units at standard cost 270,000 14.00 3,780,000 Direct Labor Cost Variance 136,250 (F) Direct Labor Rate & Efficiency Variances: Hours Cost Total Actual Hours at Actual Rate 265,000 13.75 3,643,750 Actual Hours at Standard Rate 265,000 14.00 3,710,000 Rate Variance 66,250 (F) Actual Hours at Standard Rate 265,000 14.00 3,710,000 Standard Hours at Standard Rate 270,000 14.00 3,780,000 Efficiency Variance 70,000 (F) Rate Variance 66,250 (F) Efficiency Variance 70,000 (F) Total Labor Variance 136,250 (F) Answer Part 3. Overhead Variance Controllable Variance Actual Overhead 4,550,000 Applied Overhead (90% Capacity) 4,860,000 Controllable Variance 310,000 (F) Fixed Overhead Volume Variance Budgeted Fixed Overhead (70% Capacity) 2,400,000 Fixed Overhead Cost Applied 4,860,000 Fixed Overhead Volume Variance 2,460,000 (U)