Trini Company set the following standard costs per unit for its single product. Direct materials (30 pounds $4 per pound) Direct labor (5 hours @ $14 per hour) Variable overhead (5 hours $8 per hour) Fixed overhead (5 hours @ $10 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 60,000 units per quarter. The following additional information is available. Production (in units) Standard direct labor hours (5 DLH per unit) Budgeted overhead (flexible budget) Fixed overhead Variable overhead $ 120.00 70.00 40.00 50.00 $ 280.00 708 42,000 units 210,000 hours. $ 2,400,000 $ 1,680,000 Direct materials (1,620,000 pounds $4 per pound) Direct labor (270,000 hours $14 per hour) Overhead (270,000 hours # $18 per hour) Standard (budgeted) cost Variable overhead Actual cost Actual costs incurred during the current quarter follow. Direct materials (1,615,000 pounds $4.10 per pound) Direct labor (265,000 hours $13.75 per hour) Fixed overhead Operating Levels 80% 48,000 units 240,000 hours. During the current quarter, the company operated at 90% of capacity and produced 54,000 units; actual direct labor totaled 265,000 hours. Units produced were assigned the following standard costs. Required: (a) Compute the variable overhead spending and efficiency variances. (b) Compute the fixed overhead spending and volume variances. (c) Compute the overhead controllable variance. $ 2,400,000 $ 1,920,000 $ 6,480,000 3,780,000 4,860,000 $ 15,120,000 90% 54,000 units 270,000 hours. $6,621,500 3,643,750 2,350,000 2,200,000 $ 14,815,250 $ 2,400,000 $ 2,160,000
Trini Company set the following standard costs per unit for its single product. Direct materials (30 pounds $4 per pound) Direct labor (5 hours @ $14 per hour) Variable overhead (5 hours $8 per hour) Fixed overhead (5 hours @ $10 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 60,000 units per quarter. The following additional information is available. Production (in units) Standard direct labor hours (5 DLH per unit) Budgeted overhead (flexible budget) Fixed overhead Variable overhead $ 120.00 70.00 40.00 50.00 $ 280.00 708 42,000 units 210,000 hours. $ 2,400,000 $ 1,680,000 Direct materials (1,620,000 pounds $4 per pound) Direct labor (270,000 hours $14 per hour) Overhead (270,000 hours # $18 per hour) Standard (budgeted) cost Variable overhead Actual cost Actual costs incurred during the current quarter follow. Direct materials (1,615,000 pounds $4.10 per pound) Direct labor (265,000 hours $13.75 per hour) Fixed overhead Operating Levels 80% 48,000 units 240,000 hours. During the current quarter, the company operated at 90% of capacity and produced 54,000 units; actual direct labor totaled 265,000 hours. Units produced were assigned the following standard costs. Required: (a) Compute the variable overhead spending and efficiency variances. (b) Compute the fixed overhead spending and volume variances. (c) Compute the overhead controllable variance. $ 2,400,000 $ 1,920,000 $ 6,480,000 3,780,000 4,860,000 $ 15,120,000 90% 54,000 units 270,000 hours. $6,621,500 3,643,750 2,350,000 2,200,000 $ 14,815,250 $ 2,400,000 $ 2,160,000
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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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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Transcribed Image Text:Trini Company set the following standard costs per unit for its single product.
Direct materials (30 pounds $4 per pound)
Direct labor (5 hours @ $14 per hour)
Variable overhead (5 hours $8 per hour)
Fixed overhead (5 hours @ $10 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 60,000 units per quarter. The following additional information is available.
Production (in units)
Standard direct labor hours (5 DLH per
unit)
Budgeted overhead (flexible budget)
Fixed overhead
Variable overhead.
$ 120.00
70.00
40.00
50.00
$ 280.00
70%
42,000 units
210,000 hours.
$ 2,400,000
$ 1,680,000
Direct materials (1,620,000 pounds $4 per pound)
Direct labor (270,000 hours $14 per hour)
Overhead (270,000 hours $18 per hour)
Standard (budgeted) cost
Variable overhead:
Actual cost
Actual costs incurred during the current quarter follow.
Direct materials (1,615,000 pounds $4.10 per pound)
Direct labor (265,000 hours $13.75 per hour)
Fixed overhead
Operating Levels
80%
48,000 units
240,000 hours.
During the current quarter, the company operated at 90% of capacity and produced 54,000 units; actual direct labor
totaled 265,000 hours. Units produced were assigned the following standard costs.
Required:
(a) Compute the variable overhead spending and efficiency variances.
(b) Compute the fixed overhead spending and volume variances.
(c) Compute the overhead controllable variance.
$ 2,400,000
$ 1,920,000
$ 6,480,000
3,780,000
4,860,000
$ 15,120,000
90%
54,000 units
270,000 hours.
$6,621,500
3,643,750
2,350,000
2,200,000
$ 14,815,250
$ 2,400,000
$ 2,160,000
Transcribed Image Text:Required:
(a) Compute the variable overhead spending and efficiency variances.
(b) Compute the fixed overhead spending and volume variances.
(c) Compute the overhead controllable variance.
Complete this question by entering your answers in the tabs below.
Required A
Compute the variable overhead spending and efficiency variances
Note: Indicate the effect of each vanance by selecting favorable, unfavorable, or no variance. Round "cost per unit" and "rate per hour answers to 2 decimal places
Actual Variable OH Cost
Flexible Budget
Actual hours
Required B Required C
Actual cost
Volume variance
Venable overhead efficiency variance
Variable overhead spending vartance
Actual vanable ra
Required:
(a) Compute the variable overhead spending and efficiency variances.
(b) Compute the fixed overhead spending and volume variances.
(c) Compute the overhead controllable variance.
Required A Required B Required C
Complete this question by entering your answers in the tabs below.
ELANU VYRAS
Variable overhead
Actual cost
Actual hours
0
Required B Required C
Compute the fixed overhead spending and volume variances.
Note: Indicate the effect of each variance by selecting favorable, unfavorable, or no variance. Round "cost per unit" and "rate per hour answers to 2 decimal places.
Actual Fixed OH Cost
Budgeted Overhead
Standard Cost (FOH applied)
S
Controllable variance
of Untevorable
of Favorable
Required:
(a) Compute the variable overhead spending and efficiency variances.
(b) Compute the fixed overhead spending and volume variances.
(c) Compute the overhead controllable variance.
Complete this question by entering your answers in the tabs below.
$4,550,000
4,560,000
$ 14,815,250.
(Required A
Standand variable rate
<Required B
Required A
Compute the total controllable variance.
Note: Indicate the effect of each variance by selecting favorable, unfavorable, or no variance.
Overhead Controllable Variance
10,000 Favorable
Required >
Required C>
2,200,000
$ 14,815,250
Standard Cost (VOH applied)
Standard variable rate
Standard hours
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