NSF Lube is a fast-growing chain of oil-change stores. The following data are available for last year's services: • NSF Lube performed 468,700 oil changes last year. It had budgeted 434,600 oil changes, averaging 10 minutes each Standard variable labor and support costs per oil change were as follows: Direct oil specialist services: 10 minutes at $27 per hour Variable support staff and overhead: 9.0 minutes at $22 per hour • Fixed overhead costs: Annual budget $1,038,600 Fixed overhead is applied at the rate of $3.70 per oil change. Actual oil change costs: Direct oil specialist services: 468,700 changes averaging 20 minutes at $30 per hour Variable support staff and overhead: 0.18 labor-hours at $15 per hour * 468,700 changes Fixed overhead Oil specialist Variable overhead $4.50 3.3 Required: a. Prepare a cost variance analysis for each variable cost for last year. (Do not round intermediate calculations. Indicate the effect of ea Efficiency Variance Total Variance Price Variance $ 4,687,000 1,265,490 1,395,000
NSF Lube is a fast-growing chain of oil-change stores. The following data are available for last year's services: • NSF Lube performed 468,700 oil changes last year. It had budgeted 434,600 oil changes, averaging 10 minutes each Standard variable labor and support costs per oil change were as follows: Direct oil specialist services: 10 minutes at $27 per hour Variable support staff and overhead: 9.0 minutes at $22 per hour • Fixed overhead costs: Annual budget $1,038,600 Fixed overhead is applied at the rate of $3.70 per oil change. Actual oil change costs: Direct oil specialist services: 468,700 changes averaging 20 minutes at $30 per hour Variable support staff and overhead: 0.18 labor-hours at $15 per hour * 468,700 changes Fixed overhead Oil specialist Variable overhead $4.50 3.3 Required: a. Prepare a cost variance analysis for each variable cost for last year. (Do not round intermediate calculations. Indicate the effect of ea Efficiency Variance Total Variance Price Variance $ 4,687,000 1,265,490 1,395,000
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:NSF Lube is a fast-growing chain of oil-change stores. The following data are available for last year's services
NSF Lube performed 468,700 oll changes last year It had budgeted 434,600 oil changes, averaging 10 minutes each
Standard variable labor and support costs per oil change were as follows:
Direct oil specialist services: 10 minutes at $27 per hour
Variable support staff and overhead: 9.0 minutes at $22 per hour
• Fixed overhead costs!
Annual budget $1,038,600
Fixed overhead is applied at the rate of $3.70 per oil change.
• Actual oil change costs.
Direct oil specialist services 468,700 changes averaging 20 minutes at $30 per hour
Variable support staff and overhead 0.18 labor-hours at $15 per hour * 468,700 changes
Fixed overhead
Oil specialist
Variable overhead
Required:
a. Prepare a cost variance analysis for each variable cost for last year. (Do not round intermediate calculations. Indicate the effect of each
Price Variance
Efficiency Variance
$4.50
3.3
Total Variance
U
$ 4,687,000
1,265,490
1,395,000
Transcribed Image Text:b. Prepare a fixed overhead cost variance analysis. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect.)
Price variance
Production volume variance
Fixed overhead cost variance
EU
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