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Sedona Company set the following standard costs for one unit of its product for this year. Direct material (20 Ibs. @ $3.70 per Ib.) Direct labor (10 hrs. @ $8.80 per hr.) Variable overhead (10 hrs. @ $4.20 per hr.) Fixed overhead (10 hrs. @ $2.30 per hr.) Total standard cost $ 74.00 88.00 42.00 23.00 $227.00 The $6.50 ($4.20+ $2.30) total overhead rate per direct labor hour is based on an expected operating level equal to 70% of the factory's capacity of 62,000 units per month. The following monthly flexible budget information is also available. Operating Levels (% of capacity) 65% 70% 75% 40,300 43,400 46,500 403,000 434,000 465,000 Flexible Budget Budgeted output (units) Budgeted labor (standard hours) Budgeted overhead (dollars) Variable overhead Fixed overhead $1,692,600 998, 200 $2,690,800 $1,822,800 998, 200 $2,821,000 $1,953,000 998, 200 $2,951,200 Total overhead During the current month, the company operated at 65% of capacity, employees worked 389,000 hours, and the following actual overhead costs were incurred. Variable overhead costs Fixed overhead costs $1,650,000 1,048,000 $2,698,000 Total overhead costs (1) Compute the predetermined overhead application rate per hour for total overhead, variable overhead, and fixed overhead. Predetermined During the current month, the company operated at 65% of capacity, employees worked 389,000 hours, and the following actual overhead costs were incurred. Variable overhead costs Fixed overhead costs $1,650,000 1,048,000 $2,698,000 Total overhead costs (1) Compute the predetermined overhead application rate per hour for total overhead, variable overhead, and fixed overhead. Predetermined OH Rate Variable overhead costs Fixed overhead costs Total overhead costs (2) Compute the total variable and total fixed overhead variances and classify each as favorable or unfavorable. (Indicate the effect of each variance by selecting for favorable, unfavorable, and no variance. Round "Rate per hour" answers to 2 decimal places.) -----At 65% of Operating Capacity-... Standard DL Hours Overhead Costs Applied Actual Results Variance Fav./Unf. Variable overhead costs Fixed overhead costs Total overhead costs World Company expects to operate at 90% of its productive capacity of 23,000 units per month. At this planned level, the company expects to use 12,420 standard hours of direct labor. Overhead is allocated to products using a predetermined standard rate of 0.600 direct labor hour per unit. At the 90% capacity level, the total budgeted cost includes $37,260 fixed overhead cost and $99,360 variable overhead cost. In the current month, the company incurred $208,300 actual overhead and 11,970 actual labor hours while producing 30,500 units. (Indicate the effect of each variance by selecting for favorable, unfavorable, and no variance. Do not round intermediate calculations. Round "OH costs per DL hour" to 2 decimal places.) (1) Compute the predetermined standard overhead rate for total overhead. Predetermined OH rate Variable overhead costs Fixed overhead costs Total overhead costs (2) Compute the total overhead variance. --------Actual production 30,500 units Standard Overhead costs DL Hours applied Actual results Variance Fav./Unf. Variable overhead costs Fixed overhead costs Total overhead costs $ $ 0 Sedona Company set the following standard costs for one unit of its product for this year. Direct material (20 Ibs. @ $3.70 per Ib.) Direct labor (10 hrs. @ $8.80 per hr.) Variable overhead (10 hrs. @ $4.20 per hr.) Fixed overhead (10 hrs. @ $2.30 per hr.) Total standard cost $ 74.00 88.00 42.00 23.00 $227.00 The $6.50 ($4.20 + $ 2.30) total overhead rate per direct labor hour is based on an expected operating level equal to 70% of the factory's capacity of 62,000 units per month. The following monthly flexible budget information is also available. Operating Levels (% of capacity) 65% 70% 75% 40,300 43,400 46,500 403,000 434,000 465,000 Flexible Budget Budgeted output (units) Budgeted labor (standard hours) Budgeted overhead (dollars) Variable overhead Fixed overhead $1,692,600 998, 200 $2,690,800 $1,822,800 998, 200 $2,821,000 $1,953,000 998, 200 $2,951,200 Total overhead During the current month, the company operated at 65% of capacity, employees worked 389,000 hours, and the following actual overhead costs were incurred. Variable overhead costs Fixed overhead costs $1,650,000 1,048,000 $2,698,000 Total overhead costs AH = Actual Hours SH = Standard Hours AVR = Actual Variable Rate SVR = Standard Variable Rate 1. Compute the variable overhead spending and efficiency variances. 2. Compute the fixed overhead spending and volume variances and classify each as favorable or unfavorable. 3. Compute the controllable variance
