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Compute the overhead controllable and volume variances

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Reference no: EM13558972

Tuna Company set the following standard unit costs for its single product.

 

 

 

  Direct materials (27 Ibs. @ $4 per Ib.)

$

108.00  

  Direct labor (8 hrs. @ $8 per hr.)

 

64.00  

  Factory overhead-variable (8 hrs. @ $5 per hr.)

 

40.00  

  Factory overhead-fixed (8 hrs. @ $7 per hr.)

 

56.00  

 

  Total standard cost

$

268.00  

 

The predetermined overhead rate is based on a planned operating volume of 60% of the productive capacity of 40,000 units per quarter. The following flexible budget information is available.

 

Operating Levels

 

 

 

50%

 

60%

 

70%

  Production in units

 

20,000    

 

24,000    

 

28,000    

  Standard direct labor hours

 

160,000    

 

192,000    

 

224,000    

  Budgeted overhead

 

 

 

 

 

 

      Fixed factory overhead

$

1,344,000    

$

1,344,000    

$

1,344,000    

      Variable factory overhead

$

800,000    

$

960,000    

$

1,120,000    

During the current quarter, the company operated at 70% of capacity and produced 28,000 units of product; actual direct labor totaled 222,000 hours. Units produced were assigned the following standard costs:

 

 

 

  Direct materials (756,000 Ibs. @ $4 per Ib.)

$

3,024,000  

  Direct labor (224,000 hrs. @ $8 per hr.)

 

1,792,000  

  Factory overhead (224,000 hrs. @ $12 per hr.)

 

2,688,000  

 

  Total standard cost

$

7,504,000  

 

Actual costs incurred during the current quarter follow:

 

 

 

  Direct materials (751,000 Ibs. @ $4.10)

$

3,079,100  

  Direct labor (222,000 hrs. @ $7.75)

 

1,720,500  

  Fixed factory overhead costs

 

1,968,679  

  Variable factory overhead costs

 

1,843,019  

 

  Total actual costs

$

8,611,298

 

Compute the direct labor variance, including its rate and efficiency variances.

Compute the overhead controllable and volume variances.

Reference no: EM13558972

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