Sabates Company set the following standard unit costs for its single product.
|
Direct materials (5 Ibs. @ $10 per Ib.) |
$50.00 |
|
Direct labor (3 hrs. @ $15 per hr.) |
45 |
|
Factory overhead—variable (3 hrs. @ $5 per hr.) |
15 |
|
Factory overhead—fixed (3 hrs. @ $3 per hr.) |
9 |
|
Total standard cost |
$119.00 |
The predetermined overhead rate is based on a planned operating volume of 90% of the productive capacity of 100,000 units per quarter. The following flexible budget information is available.
|
|
Operating Levels |
||
|
|
80% |
90% |
100% |
|
Production in units |
32,000 |
36,000 |
40,000 |
|
Standard direct labor hours |
96,000 |
108,000 |
120,000 |
|
Budgeted overhead |
|
|
|
|
Fixed factory overhead |
$324,000 |
$324,000 |
$324,000 |
|
Variable factory overhead |
480,000 |
540,000 |
600,000 |
During the current quarter, the company operated at 80% of capacity and produced 32,000 units of product; direct labor hours worked were 100,000. Units produced were assigned the following standard costs:
|
Direct materials (160,000 Ibs. @ $10 per Ib.) |
$1,600,000 |
|
Direct labor (96,000 hrs. @ $15 per hr.) |
1,440,000 |
|
Factory overhead (96,000 hrs. @ $8 per hr.) |
768,000 |
|
Total standard cost |
$3,808,000 |
Actual costs incurred during the current quarter follow:
|
Direct materials (155,000 Ibs. @ $10.20) |
$1,581,000 |
|
Direct labor (100,000 hrs. @ $14) |
1,400,000 |
|
Fixed factory overhead costs |
370,000 |
|
Variable factory overhead costs |
480,000 |
|
Total actual costs |
$3,831,000 |
Refer to information in Problem 24 1B.
Required
Compute these variances: (a) variable overhead spending and efficiency, (b) fixed overhead spending and volume, and (c) total overhead controllable.