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Trico Company set the following standard unit costs for its single product. Direct materials (26 Ibs. @ $4 per Ib.) $ 104.00 Direct labor (8
Trico Company set the following standard unit costs for its single product. |
Direct materials (26 Ibs. @ $4 per Ib.) | $ | 104.00 |
Direct labor (8 hrs. @ $8 per hr.) | 64.00 | |
Factory overheadvariable (8 hrs. @ $5 per hr.) | 40.00 | |
Factory overheadfixed (8 hrs. @ $7 per hr.) | 56.00 | |
Total standard cost | $ | 264.00 |
The predetermined overhead rate is based on a planned operating volume of 60% of the productive capacity of 60,000 units per quarter. The following flexible budget information is available. |
Operating Levels | ||||||
50% | 60% | 70% | ||||
Production in units | 30,000 | 36,000 | 42,000 | |||
Standard direct labor hours | 240,000 | 288,000 | 336,000 | |||
Budgeted overhead | ||||||
Fixed factory overhead | $ | 2,016,000 | $ | 2,016,000 | $ | 2,016,000 |
Variable factory overhead | $ | 1,200,000 | $ | 1,440,000 | $ | 1,680,000 |
During the current quarter, the company operated at 70% of capacity and produced 42,000 units of product; actual direct labor totaled 331,000 hours. Units produced were assigned the following standard costs: |
Direct materials (1,092,000 Ibs. @ $4 per Ib.) | $ | 4,368,000 |
Direct labor (336,000 hrs. @ $8 per hr.) | 2,688,000 | |
Factory overhead (336,000 hrs. @ $12 per hr.) | 4,032,000 | |
Total standard cost | $ | 11,088,000 |
Actual costs incurred during the current quarter follow: |
Direct materials (1,087,000 Ibs. @ $4.10 per lb.) | $ | 4,456,700 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Direct labor (331,000 hrs. @ $7.75 per hr.) | 2,565,250 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fixed factory overhead costs | 2,935,283 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Variable factory overhead costs | 2,747,925 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total actual costs | $ | 12,705,158 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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