Tuna Company set the following standard unit costs for it’s single product
Direct Materials (25lbs @ $4 per lb) $100
Direct Labor (6hrs@ $8 per hour) $48
Factory Overhead variable(6hrs@$5perhour) $30.00
Factory Overhead Fixed(6hrs@$7perhour) 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:
Production in units 42,000@70%/48,000@80%/54,000@90%
Standard Direct labor hours 252000@70%/288000@80%/324000@90%
Budgeted Overhead:
Fixed Factory Overhead $2016000@70%/$2016000@80%/$2016000@90%
Variable Factory Overhead $1260@70%/ $1440000@80%/ $1620000@90%
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 (1050000lbs @$4 per lb $4200000
Direct Labor(252000hrs @$8 per hour) $2016000
Factory Overhead(252000hrs@$12perhr) $3024000
Total Standard Cost $9240000
Actual Costs incurred during the current quarter follow:
Direct Materials(1000000lbs @ $4.25) $4250000
Direct Labor(250000hrs @ $7.75per hr) 1937500
Fixed Factory Overhead Costs $1960000
Variable Factory Overhead Costs $1200000
Total Actual Costs $9347500
1. Compute the direct materials cost variance, including it’s price and quantity variances
Direct Materials Cost Variance $?????
Price Variance $????
Quantity Variance $????
2.Compute the direct labor variance, including it’s rate and efficiency variances:
Direct Labor Cost Variance $???
Rate Variance $????
Efficiency Variance $????
3. Compute the overhead controllable and volume variances
Controllable Variance $??
Fixed Overhead Volume Variance $???
4. Compute the direct Materials cost variance including it’s price and quantity variances
Direct materials cost variance $?????
Price Variance $????
Quantity Variance $????
5. Compute the direct labor Variance including it’s rate and efficiency variances:
Direct labor cost variance $???
Rate Variance $????
Efficiency Variance $???
6. Compute the overhead controllable and volume variances
Controllable Variance $???
Fixed overhead volume variance $????