View the step-by-step solution to: V. Computation of materials, labor, and overhead variances

V. Computation of materials, labor,...
This question was answered on Mar 15, 2012. View the Answer


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
Budgeted overhead
Fixed factory overhead…………… $2,016,000 $2,016,000 $2,016,000
Variable factory overhead…………$1,260,000 $1,440,000 $1,620,000

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
Fixed factory overhead costs…………………………………. 1,960,000
Variable factory overhead costs……………………………… 1,200,000
Total actual costs……………………………………………... $9,347,500

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

View the entire interaction

Dear Student Please find attached s... View the full answer

Accounting-8016440.doc

Answer
3)
Overhead Controllable and Volume Variance
At 70% Capacity Budgeted Variable overhead rate
=Variable Overhead/Direct Labor Hours
=$1,260,000 /252,000Hrs
=$5 Variable factory overhead rate...

Why Join Course Hero?

Course Hero has all the homework and study help you need to succeed! We’ve got course-specific notes, study guides, and practice tests along with expert tutors and customizable flashcards—available anywhere, anytime.

-

Educational Resources
  • -

    Study Documents

    Find the best study resources around, tagged to your specific courses. Share your own to gain free Course Hero access or to earn money with our Marketplace.

    Browse Documents
  • 890,990,898

    Question & Answers

    Get one-on-one homework help from our expert tutors—available online 24/7. Ask your own questions or browse existing Q&A threads. Satisfaction guaranteed!

    Ask a Question
  • 890,990,898

    Flashcards

    Browse existing sets or create your own using our digital flashcard system. A simple yet effective studying tool to help you earn the grade that you want!

    Browse Flashcards