Trini Company set the following standard costs per unit for its single product Direct materials (30 pounds @ $5.50 per pound) Direct labor (7 hours @ $14 per hour) Variable overhead (7 hours $6 per hour) Fixed overhead (7 hours $12 per hour) Standard cost per unit Overhead is applied using direct labor hours. The standard overhead rate is based on a predicted activity level of 80% of the company's capacity of 62,000 units per quarter. The following additional information is available. Operating Levels Production (in units) Standard direct labor hours (7 DLH/unit) Budgeted overhead (flexible budget) Fixed overhead Variable overhead $ 165.00 98.00 42.00 84.00 $ 389.00 43,400 303,800 $ 4,166,400 $ 1,822,800 Direct materials (1,674,800 pounds @ $5.50 per pound) Direct labor (398,680 hours Overhead (390, 608 hours $14 per hour) $18 per hour) Standard (budgeted) cost Actual costs incurred during the current quarter follow. Direct materials (1,658,809 pounds @ $7.60 per pound) Direct labor (386,600 hours @ $12.00 per hour) Fixed overhead Variable overhead Actual cost 885 49,600 347, 200 During the current quarter, the company operated at 90% of capacity and produced 55,800 units; actual direct labor totaled 386,600 hours. Units produced were assigned the following standard costs. $ 4,166, 400 $ 4,166,400 $ 2,883, 298 $ 2,343, 600 $ 9,207,000 5,468,480 7,839,896 $ 21,706,290 55,800 390, 600 $ 12,680, 808 4,639,209 3,321, 408 3,189,408 $ 23,670, 808 ired: impute the direct materials variance, including its price and quantity variances. ompute the direct labor variance, including its rate and efficiency variances. ompute the overhead controllable and volume variances.
Trini Company set the following standard costs per unit for its single product Direct materials (30 pounds @ $5.50 per pound) Direct labor (7 hours @ $14 per hour) Variable overhead (7 hours $6 per hour) Fixed overhead (7 hours $12 per hour) Standard cost per unit Overhead is applied using direct labor hours. The standard overhead rate is based on a predicted activity level of 80% of the company's capacity of 62,000 units per quarter. The following additional information is available. Operating Levels Production (in units) Standard direct labor hours (7 DLH/unit) Budgeted overhead (flexible budget) Fixed overhead Variable overhead $ 165.00 98.00 42.00 84.00 $ 389.00 43,400 303,800 $ 4,166,400 $ 1,822,800 Direct materials (1,674,800 pounds @ $5.50 per pound) Direct labor (398,680 hours Overhead (390, 608 hours $14 per hour) $18 per hour) Standard (budgeted) cost Actual costs incurred during the current quarter follow. Direct materials (1,658,809 pounds @ $7.60 per pound) Direct labor (386,600 hours @ $12.00 per hour) Fixed overhead Variable overhead Actual cost 885 49,600 347, 200 During the current quarter, the company operated at 90% of capacity and produced 55,800 units; actual direct labor totaled 386,600 hours. Units produced were assigned the following standard costs. $ 4,166, 400 $ 4,166,400 $ 2,883, 298 $ 2,343, 600 $ 9,207,000 5,468,480 7,839,896 $ 21,706,290 55,800 390, 600 $ 12,680, 808 4,639,209 3,321, 408 3,189,408 $ 23,670, 808 ired: impute the direct materials variance, including its price and quantity variances. ompute the direct labor variance, including its rate and efficiency variances. ompute the overhead controllable and volume variances.
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
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Transcribed Image Text:Trini Company set the following standard costs per unit for its single product
Direct materials (30 pounds @ $5.50 per pound)
Direct labor (7 hours @ $14 per hour)
Variable overhead (7 hours @ $6 per hour).
Fixed overhead (7 hours @ $12 per hour)
Standard cost per unit
Overhead is applied using direct labor hours. The standard overhead rate is based on a predicted activity level of 80% of
the company's capacity of 62,000 units per quarter. The following additional information is available.
Operating Levels
Production (in units)
Standard direct labor hours (7 DLH/unit)
Budgeted overhead (flexible budget)
Fixed overhead
Variable overhead
Direct materials (1,674,800 pounds @ $5.50 per pound)
Direct labor (398,680 hours @ $14 per hour)
Overhead (390, 608 hours
$18 per hour)
Standard (budgeted) cost
Actual costs incurred during the current quarter follow.
Direct materials (1,658,800 pounds @ $7.60 per pound)
Direct labor (386,680 hours $12.00 per hour)
Fixed overhead
Variable overhead
Actual cost
$ 165.00
98.86
42.80
84.90
389.80
43, 400
383, 800
Req 1
$ 4,166,400
$ 1,822, 800
During the current quarter, the company operated at 90% of capacity and produced 55,800 units; actual direct labor
totaled 386,600 hours. Units produced were assigned the following standard costs.
Complete this question by entering your answers in the tabs below.
Req
92
Actual Cost
Required:
1. Compute the direct materials variance, including its price and quantity variances.
2. Compute the direct labor variance, including its rate and efficiency variances.
3. Compute the overhead controllable and volume variances.
Req 3 Volume
Variance
88%
49,600
347, 200
$ 4, 166, 408
$ 2,883, 298
$ 9,207,086
5,468,480
7,838, 880
$ 21,705, 286
Req 3
Controllable
Variance
Compute the direct materials variance, including its price and quantity variances. (Indicate the effect of each variance by selecting favorable, unfavorable, or no variance. Round "Cost per unit" answers to 2 decimal places.)
Standard Cost
$ 12, 680, 808
4,639,208
3,321, 408
3,189, 408
$ 23,670, 808
98%
55,896
390, 600
$ 4, 166, 400
$ 2,343, 600
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