NSF Lube is a fast-growing chain of oil-change stores. The following data are available for last year's services:
• NSF Lube performed 475,200 oil changes last year. It had budgeted 432,000 oil changes, averaging 10 minutes each.
• Standard variable labor and support costs per oil change were as follows:
Direct oil specialist services: 10 minutes at $24 per hour . . . . . . . $4
Variable support staff and overhead: 7.5 minutes at $16 per hour . 2
• Fixed overhead costs:
Annual budget . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,036,000
• Fixed overhead is applied at the rate of $2.40 per oil change.
• Actual oil change costs:
Direct oil specialist services: 475,200 changes averaging
12 minutes at $26.00 per hour . . . . . . . . . . . . . . . . . . . . $2,471,040
Variable support staff and overhead: 0.14 labor-hours at
$15.00 per hour × 475,200 changes . . . . . . . . . . . . . . . . 997,920
Fixed overhead . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,200,000
Required
a. Prepare a cost variance analysis for each variable cost for last year.
b. Prepare a fixed overhead cost variance analysis like the one in Exhibit 16.13.