Alternative Computation of Overhead Variances

1165 Chapter 23 Evaluating Variances from Standard Costs cerials PR 23-3B Direct materials, direct labor, and factory overhead cost variance OBJ. 3,4 analysis Road Gripper Tire Co. manufactures automobile tires. Standard costs and actual costs for direct materials, direct labor, and factory overhead incurred for the manufacture of 4,160 tires were as follows: Standard Costs Actual Costs Direct materials 100,000 lb. at $6.40 101,000 lb. at $6.50 Direct labor 2,080 hrs. at $15.75 2,000 hrs. at $15.40 Factory overhead Rates per direct labor hr., based on 100% of normal capacity of 2,000 direct labor hrs.: Variable cost, $4.00 $8,200 variable cost Fixed cost, $6.00 $12,000 fixed cost Each tire requires 0.5 hour of direct labor. Instructions Determine (a) the direct materials price variance, direct materials quantity variance, and total direct materials cost variance; (b) the direct labor rate variance, direct labor time vari- ance, and total direct labor cost variance; and (c) the variable factory overhead controllable variance, fixed factory overhead volume variance, and total factory overhead cost variance. OBJ. 4 Merge & Center 0. Formatting as Table Styles Format Filter K L M N QR S TU V W Y Z AA AIAC AD AE AH Alternative Computation of Overhead Variances: Factory Overhead Applied costs Actual costs Balance Overapplied + Actual Factory Overhead Applied Factory Overhead Budgeted Factory Overhead for Amount Produced Variable cost Fixed cost Total Controllable Varance Volun Variance Total Factory Overhead Varianco 100%