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V. Computation of materials, labor, and overhead variances
Tuna Company set the following standard unit costs for its single product.
Direct materials (25 lbs. @ \$4 per lb.)………………………………….. \$100.00
Direct labor (6 hrs. @ \$8 per hr.)……………………………………….. 48.00
Factory overhead-variable (6 hrs. @ \$5 per hr.)………………………... 30.00
Factory overhead-fixed (6 hrs. @ \$7 per hr.)…………………………… 42.00
Total standard cost………………………………………………………. \$220.00

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………………... 252,000 288,000 324,000
Fixed factory overhead…………… \$2,016,000 \$2,016,000 \$2,016,000

During the current quarter, the company operated at 70% of capacity and produced 42,000 units of product; actual direct labor totaled 250,000 hours. Units produced were assigned the following standard costs:
Direct materials (1,050,000 lbs.@ \$4 per lb.)………………………….. \$4,200,000
Direct labor (252,000 hrs. @ \$8 per hr.)……………………………….. 2,016,000
Factory overhead (252,000 hrs.@ \$ 12 per hr.)………………………… 3,024,000
Total standard cost……………………………………………………….\$9,240,000

Actual costs incurred during the current quarter follow:
Direct materials (1,000,000 lbs. @ \$4.25)……………………. \$4,250,000
Direct labor (250,000 hrs. @ \$7.75)………………………….. 1,937,500
Total actual costs……………………………………………... \$9,347,500

3. Compute the overhead controllable and volume variances.
4. Compute the variable overhead spending and efficiency variance

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