Question
[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.
[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. @ $4.40 per Ib.) | $ | 132.00 |
Direct labor (6 hrs. @ $14 per hr.) | 84.00 | |
Factory overheadvariable (6 hrs. @ $9 per hr.) | 54.00 | |
Factory overheadfixed (6 hrs. @ $12 per hr.) | 72.00 | |
Total standard cost | $ | 342.00 |
The predetermined overhead rate is based on a planned operating volume of 80% of the productive capacity of 55,000 units per quarter. The following flexible budget information is available.
Operating Levels | ||||||
70% | 80% | 90% | ||||
Production in units | 38,500 | 44,000 | 49,500 | |||
Standard direct labor hours | 231,000 | 264,000 | 297,000 | |||
Budgeted overhead | ||||||
Fixed factory overhead | $ | 3,168,000 | $ | 3,168,000 | $ | 3,168,000 |
Variable factory overhead | $ | 2,079,000 | $ | 2,376,000 | $ | 2,673,000 |
During the current quarter, the company operated at 90% of capacity and produced 49,500 units of product; actual direct labor totaled 292,000 hours. Units produced were assigned the following standard costs.
Direct materials (1,485,000 Ibs. @ $4.40 per Ib.) | $ | 6,534,000 |
Direct labor (297,000 hrs. @ $14 per hr.) | 4,158,000 | |
Factory overhead (297,000 hrs. @ $21 per hr.) | 6,237,000 | |
Total standard cost | $ | 16,929,000 |
Actual costs incurred during the current quarter follow.
Direct materials (1,474,000 Ibs. @ $7.40 per lb.) | $ | 10,907,600 |
Direct labor (292,000 hrs. @ $12.50 per hr.) | 3,650,000 | |
Fixed factory overhead costs | 3,014,700 | |
Variable factory overhead costs | 2,822,300 | |
Total actual costs | $ | 20,394,600 |
Need help with: 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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