Parker Plastic, Incorporated, manufactures plastic mats to use with rolling office chairs. Its standard cost information for last yearfollows.Direct materials (plastic)Direct laborVariable manufacturing overhead (based on direct labor hours)Fixed manufacturing overhead ($517,000 940,000 units)Parker Plastic had the following actual results for the past year.Number of units produced and soldiNumber of square feet of plastic usedCost of plastic purchased and usedNumber of labor hours workedDirect labor costVariable overhead costFixed overhead costRequired:1,040,00011,960,000$ 7,893,600463,000$ 4,606,850$ 439,850$ 502,000Standard Quantity12 square foot0.45 hourStandard Price (Rate)$ 0.68 per square foot$ 10.35 per hour0.45 hour$ 0.85 per hourCalculate 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., zerovariance).Fixed Overhead Spending VarianceFixed Overhead Volume VarianceOver or Underapplied Fixed OverheadStandard Unit Cost$ 8.164.660.380.55

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Description: Parker Plastic, Incorporated, manufactures plastic mats to use with rolling office chairs. Its standard cost information for last yearfollows.Direct materials (plastic)Direct laborVariable manufacturing overhead (based on direct labor hours)Fixed ma

Variance arises when the actual costs is different from the standard costs. The results are…

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Accounting

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) Fixed manufacturing overhead ($517,000 940,000 units) Parker Plastic had the following actual results for the past year. Number of units produced and sold 1,840,000 Standard Quantity 12 square foot 0.45 hour Standard Price (Rate) $ 0.68 per square foot $ 10.35 per hour $ 8.85 per hour 0.45 hour Standard Unit Cost $ 8.16 4.66 0.38 0.55

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) Fixed manufacturing overhead ($517,000 940,000 units) Parker Plastic had the following actual results for the past year. Number of units produced and sold 1,840,000 Standard Quantity 12 square foot 0.45 hour Standard Price (Rate) $ 0.68 per square foot $ 10.35 per hour $ 8.85 per hour 0.45 hour Standard Unit Cost $ 8.16 4.66 0.38 0.55

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Concept explainers

Variance Analysis

In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.

Standard Costing

The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.

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Question

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)
Fixed manufacturing overhead ($517,000 940,000 units)
Parker Plastic had the following actual results for the past year.
Number of units produced and soldi
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
Required:
1,040,000
11,960,000
$ 7,893,600
463,000
$ 4,606,850
$ 439,850
$ 502,000
Standard Quantity
12 square foot
0.45 hour
Standard Price (Rate)
$ 0.68 per square foot
$ 10.35 per hour
0.45 hour
$ 0.85 per hour
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).
Fixed Overhead Spending Variance
Fixed Overhead Volume Variance
Over or Underapplied Fixed Overhead
Standard Unit Cost
$ 8.16
4.66
0.38
0.55

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