Parker Plastic, Incorporated, manufactures plastic mats to use with rolling office chairs. Its standard cost information for last year follows: Direct materials (plastic) Direct labor Variable manufacturing overhead (based on direct labor hours) 12 Standard Quantity 0.1 0.1 Fixed manufacturing overhead ($160,000 + 800,000 units) Parker Plastic had the following actual results for the past year: Standard Price (Rate) square foot hour hour Standard Unit Cost $ 0.61 $10.00 $0.50 per square foot per hour per hour $ 7.32 1.00 0.05 0.20
Parker Plastic, Incorporated, manufactures plastic mats to use with rolling office chairs. Its standard cost information for last year follows: Direct materials (plastic) Direct labor Variable manufacturing overhead (based on direct labor hours) 12 Standard Quantity 0.1 0.1 Fixed manufacturing overhead ($160,000 + 800,000 units) Parker Plastic had the following actual results for the past year: Standard Price (Rate) square foot hour hour Standard Unit Cost $ 0.61 $10.00 $0.50 per square foot per hour per hour $ 7.32 1.00 0.05 0.20
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Parker Plastic, Incorporated, manufactures plastic mats to use with rolling office chairs. Its standard cost information for last year
follows:
Direct materials (plastic)
12
Direct labor
Variable manufacturing overhead (based on direct 0.1
labor hours)
10,350,000
$ 6,106,500
Standard
Quantity
85,000
$ 816,000
$ 51,000
$ 138,000
Fixed manufacturing overhead ($160,000+800,000
units)
Parker Plastic had the following actual results for the past year:
Number of units produced and sold 900,000
Number of square feet of plastic used
Cost of plastic purchased and used
Number of labor hours worked
Direct labor cost
Variable overhead cost
Fixed overhead cost
0.1
Standard Price
(Rate)
square foot
hour
hour
Standard Unit
Cost
$ 0.61
$10.00
$0.50
per square
foot
per hour
per hour
Required:
Calculate Parker Plastic's fixed overhead spending and volume variances and its over- or underapplied fixed overhead.
Note: Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero
variance).
$
7.32
1.00
0.05
0.20
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