The following Information applles to the questions displayed below.] Trico Compa
ID: 2588416 • Letter: T
Question
The following Information applles to the questions displayed below.] Trico Company set the following standard unit costs for its single product Direct materials (26 lbs.$4 per lb.) Direct labor (8 hrs. $8 per hr.) Factory overhead-variable (8 hrs.@$5 per hr.) Factory overhead-fixed (8 hrs. @ $7 per hr.) $ 104.00 64.00 40.00 56.00 Total standard cost $264.00 The predetermined overhead rate is based on a planned operating volume of 80% of the productive capacity of 40,000 units per quarter. The following fiexible budget information is available Operating Levels 70% 28,000 224,000 80% 32,000 256,000 90% Production in units Standard direct labor hours Budgeted overhead 36,000 288,000 Fixed factory overhead Variable factory overhead $ 1,792,000 1,792,000 1,792,000 S 1,120,000 1,280,000 1,440,000 During the current quarter, the company operated at 90% of capacity and produced 36,000 units of product; actual direct labor totaled 280,000 hours. Units produced were assigned the following stancard costs: Direct materials (936,000 lbs. $4 per lb.) Direct labor (288,000 hrs. $8 per hr.) Factory overhead (288,000 hrs. $12 per hr.) $ 3,744,000 2,304,000 3.456,000 Total standard cost $ 9,504,000 Actual costs incurred during the current quarter follow: Direct materials (931,000 lbs. $4.10 per lb.) Direct labor (280.000 hrs. @ $7.75 per h Fixed factory overhead costs 3,817100 2.170,000 2.483,019 Variable foctory overhead costs 2.324,528 Total actual costs $ 10,794.647Explanation / Answer
Overhead controllable variance = Actual overhead - Budgeted overhead = (Actual hours x Actual rate) - (Fixed overhead + Standard hours x standard variable rate) = (Fixed 2483019 + Variable 2324528) - (1792000 + 288000 x 5) = 4807547 - 3232000 = 1575547 Fixed overhead volume variance = Budgeted fixed overhead - Fixed overhead charged to production or applied = 1792000 - Standard hour for actual production x standard rate = 1792000 - 36000 x 8hrs x $7 = 1792000 - 2016000 = -224000