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Trico Company set the following standard unit costs for its single product. Direct materials (30 Ibs. @ $5.00 per Ib.) $ 150.00 Direct labor (7

Trico Company set the following standard unit costs for its single product.

Direct materials (30 Ibs. @ $5.00 per Ib.) $ 150.00
Direct labor (7 hrs. @ $14 per hr.) 98.00
Factory overheadvariable (7 hrs. @ $7 per hr.) 49.00
Factory overheadfixed (7 hrs. @ $9 per hr.) 63.00
Total standard cost $ 360.00

The predetermined overhead rate is based on a planned operating volume of 80% of the productive capacity of 61,000 units per quarter. The following flexible budget information is available.

Operating Levels
70% 80% 90%
Production in units 42,700 48,800 54,900
Standard direct labor hours 298,900 341,600 384,300
Budgeted overhead
Fixed factory overhead $ 3,074,400 $ 3,074,400 $ 3,074,400
Variable factory overhead $ 2,092,300 $ 2,391,200 $ 2,690,100

During the current quarter, the company operated at 90% of capacity and produced 54,900 units of product; actual direct labor totaled 316,300 hours. Units produced were assigned the following standard costs.

Direct materials (1,647,000 Ibs. @ $5.00 per Ib.) $ 8,235,000
Direct labor (384,300 hrs. @ $14 per hr.) 5,380,200
Factory overhead (384,300 hrs. @ $16 per hr.) 6,148,800
Total standard cost $ 19,764,000

Actual costs incurred during the current quarter follow.

Direct materials (1,364,000 Ibs. @ $7.80 per lb.) $ 10,639,200
Direct labor (316,300 hrs. @ $11.10 per hr.) 3,510,930
Fixed factory overhead costs 2,348,400
Variable factory overhead costs 2,742,200
Total actual costs $ 19,240,730

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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