Trico Company set the following standard unit costs for its single product. Direct materials (30 lbs. @ $4 per lb.) $120 Direct labor (5 hrs. @ $14 per hr.) 70 Factory overhead—variable (5 hrs. @ $8 per hr.) 40 Factory overhead—fixed (5 hrs. @ $10 per hr.) 60 Total standard cost $280 The predetermined overhead rate is based on a planned operating volume of 80% of the productive capacity of 60,000 units per quarter. The following flexible budget information is available. Operating Level Operating Level Operating Level 70% 80% 90% Production in units 42,000 48,000 54,000 Standard direct labor hours 210,000 240,000 270,000 Budgeted overhead: Fixed factory OH $2,400,000 $2,400,000 $2,400,000 Variable factory OH $1,68,000 $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 total 265,000 hours. Units produced were assigned the following standard costs: Direct materials (1,620,000 lbs. @ $4 per lb.) $6,480,000 Direct labor (270,000 hrs. @ $14 per hr.) 3,780,000 Factory overhead (270,000 hrs. @ $18 per hr.) 4,860,000 Total standard cost $15,120,000 Actual costs incurred during the current quarter follow: Direct materials (1,615,000 lbs. @ $4.10 per lb.) $6,621,500 Direct labor (265,000 hrs. @ $13.75 per hr.) 3,643,750 Fixed factory overhead costs 2,350,000 Variable factory overhead costs 2,200,000 Total actual costs $14,815,250 Required Compute the direct labor cost variance, including its rate and efficiency variances.
Trico Company set the following standard unit costs for its single product.
|
Direct materials (30 lbs. @ $4 per lb.) |
$120 |
|
Direct labor (5 hrs. @ $14 per hr.) |
70 |
|
Factory |
40 |
|
Factory overhead—fixed (5 hrs. @ $10 per hr.) |
60 |
|
Total |
$280 |
The predetermined overhead rate is based on a planned operating volume of 80% of the productive capacity of 60,000 units per quarter. The following flexible budget information is available.
|
|
Operating Level |
Operating Level |
Operating Level |
|
|
70% |
80% |
90% |
|
Production in units |
42,000 |
48,000 |
54,000 |
|
Standard direct labor hours |
210,000 |
240,000 |
270,000 |
|
Budgeted overhead: |
|
|
|
|
Fixed factory OH |
$2,400,000 |
$2,400,000 |
$2,400,000 |
|
Variable factory OH |
$1,68,000 |
$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 total 265,000 hours. Units produced were assigned the following standard costs:
|
Direct materials (1,620,000 lbs. @ $4 per lb.) |
$6,480,000 |
|
Direct labor (270,000 hrs. @ $14 per hr.) |
3,780,000 |
|
Factory overhead (270,000 hrs. @ $18 per hr.) |
4,860,000 |
|
Total standard cost |
$15,120,000 |
Actual costs incurred during the current quarter follow:
|
Direct materials (1,615,000 lbs. @ $4.10 per lb.) |
$6,621,500 |
|
Direct labor (265,000 hrs. @ $13.75 per hr.) |
3,643,750 |
|
Fixed |
2,350,000 |
|
Variable factory overhead costs |
2,200,000 |
|
Total actual costs |
$14,815,250 |
Required
-
Compute the direct labor cost variance, including its rate and efficiency variances.
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