Comprehensive Variance Problem
Trenton Manufacturing Company manufactures one product, with a standard cost detailed as follows:
Direct materials, 20 yards at $6 per yard |
$120 |
Direct labor, 25 hours at $5 per hour |
125 |
Factory overhead applied at 80% of |
|
direct labor (variable costs = $75; fixed costs = $25) |
100 |
Variable selling and administrative |
80 |
Fixed selling and administrative |
50 |
Total unit costs |
$475 |
Standards have been computed based on a master budget activity level of 14,400 direct labor hours per month. Actual activity for the past month was as follows:
Materials used |
9,500 yards at $6.15 per yard |
Direct labor |
12,600 hours at $5.10 per hour |
Total factory overhead |
$55,500 |
Production |
500 units |
Required
Prepare variance analyses for the variable and fixed costs. Indicate which variances cannot be computed. Materials are purchased as they are used.