Direct materials (30 lbs. @ $4 per Ib.) Direct labor (5 hrs. @ $14 per hr.) Factory overhead-variable (5 hrs. @ $8 per hr.) Factory overhead-fixed (5 hrs. @ $10 per hr.) Total standard cost $120.00 70.00 40.00 50.00 $ 280.00 The predetermined overhead rate is based on a planned operating volume of 80% of the productive capacity of 6 units per quarter. The following flexible budget Information is available. Production in units Standard direct labor hours Budgeted overhead Fixed factory overhead Variable factory overhead Operating Levels 79% 89% 42,000 48,000 210,00 240, eee 90% 54,000 279,000 $2,400,000 $2,400,000 $2,499,000 $1,680,000 $1,920, vee $2,160,000 During the current quarter, the company operated at 90% of capacity and produced 54,000 units of product, actual labor totaled 265,000 hours. Units produced were assigned the following standard costs. Direct saterials (1,628, 082 Ibs. @ 54 per Ib. ) Direet labor (278,888 hrs. $14 pen hr.) Factory overhead (278,688 hrs. @ $18 per hr.) Total standard cost $ 6,488, eee 3.789, een 4,868, eee $15 120 Dee Actual costs incurred during the current quarter follow. Direct materials (1.615, gee Ibs e 24. 10 per 16.) Direct labor 265,000 hrs. 1,75 per hry Fixed factory overhead costs Variable factory overhead costs Total actual costs 3 6 500 316d3,50 2359 eng 2.280,00 14 15 Required: 1. Compute the direct materials cost variance, including its price and quantity varlances. AQ = Actual Quantity SQ = Standard Quantity AP = Actual Price SP = Standard Price Actual Cost Standard Cost s 0 S 0 $ 0 is OM 2. Compute the direct labor cost varlance, including its rate and efficiency variances. AH = Actual Hours SH = Standard Hours AR = Actual Rate SR = Standard Rate Actual Cost Standard Cost S 0 s 0 S 0 3. Compute the overhead controllable and volume varlances. Controllable Variance Actual overhead Budgeted overhead Controllable variance Fixed overhead volume variance Budgeted fixed overhead Fized overhead cost applied Fixed overhead volume variance 308.jpg