This question follows up Self Study Question 2. Assume that the fixed production cost budget for the month was $320,000, and actual fixed production overhead costs were $332,000. The estimated monthly production was 80,000 cases (or 16,000 standard labor hours). Compute the fixed production overhead price variance and the fixed production overhead production volume variance.
Self Study Question 2: Last month, the following events took place at Superior Supplies:
• Produced 100,000 “leather like” digital music player cases.
• Had standard variable costs per unit (that is, per case):
|
Direct materials: 3 pounds at $1.50 |
$ 4.50 |
|
Direct labor: 0.20 labor hours at $22.50 |
4.50 |
|
Variable production overhead: .20 labor hours at $10.00 |
2.00 |
|
Total per case |
$11.00 |
• Incurred actual production costs:
|
Direct materials purchased and used: |
|
|
325,000 pounds at $1.40 |
$455,000 |
|
Direct labor: 19,000 labor hours at $25 |
475,000 |
|
Variable overhead |
209,000 |
Compute the direct materials, labor, and variable production overhead price and efficiency variances.