Required information Use the following information for the Problems below. [The following information applies to the questions displayed below.] Trico Company set the following standard
Required information
Use the following information for the Problems below.
[The following information applies to the questions displayed below.] Trico Company set the following standard unit costs for its single product.
| Direct materials (30 Ibs. @ $4 per Ib.) | $ | 120.00 |
| Direct labor (5 hrs. @ $14 per hr.) | 70.00 | |
| Factory overheadvariable (5 hrs. @ $8 per hr.) | 40.00 | |
| Factory overheadfixed (5 hrs. @ $10 per hr.) | 50.00 | |
| Total standard cost | $ | 280.00 |
The predetermined overhead rate is based on a planned operating volume of 80% of the productive capacity of 60,000 units per quarter. The following flexible budget information is available.
| Operating Levels | ||||||
| 70% | 80% | 90% | ||||
| Production in units | 42,000 | 48,000 | 54,000 | |||
| Standard direct labor hours | 210,000 | 240,000 | 270,000 | |||
| Budgeted overhead | ||||||
| Fixed factory overhead | $ | 2,400,000 | $ | 2,400,000 | $ | 2,400,000 |
| Variable factory overhead | $ | 1,680,000 | $ | 1,920,000 | $ | 2,160,000 |
During the current quarter, the company operated at 90% of capacity and produced 54,000 units of product; actual direct labor totaled 265,000 hours. Units produced were assigned the following standard costs.
| Direct materials (1,620,000 Ibs. @ $4 per Ib.) | $ | 6,480,000 |
| Direct labor (270,000 hrs. @ $14 per hr.) | 3,780,000 | |
| Factory overhead (270,000 hrs. @ $18 per hr.) | 4,860,000 | |
| Total standard cost | $ | 15,120,000 |
Actual costs incurred during the current quarter follow.
| Direct materials (1,615,000 Ibs. @ $4.10 per lb.) | $ | 6,621,500 |
| Direct labor (265,000 hrs. @ $13.75 per hr.) | 3,643,750 | |
| Fixed factory overhead costs | 2,350,000 | |
| Variable factory overhead costs | 2,200,000 | |
| Total actual costs | $ | 14,815,250 |
Problem 21-4A Computation of materials, labor, and overhead variances LO P2, P3
Required: 1. Compute the direct materials cost variance, including its price and quantity variances. AQ = Actual Quantity SQ = Standard Quantity AP = Actual Price SP = Standard Price
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Authors: Earl R. Wilson, Jacqueline L Reck, Susan C Kattelus
16th Edition
78110939, 978-0078110931
