Reference no: EM131806484
Question - Tuna Company set the following standard unit costs for its single product.
Direct materials (28 Ibs. @ $3.00 per Ib.) $ 84.00
Direct labor (5 hrs. @ $8.50 per hr.) 42.50
Factory overhead-variable (5 hrs. @ $4.90 per hr.) 24.50
Factory overhead-fixed (5 hrs. @ $7.80 per hr.) 39.00
Total standard cost $ 190.00
The predetermined overhead rate is based on a planned operating volume of 80% of the productive capacity of 58,000 units per quarter. The following flexible budget information is available.
Operating Levels
70% 80% 90%
Production in units 40,600 46,400 52,200
Standard direct labor hours 203,000 232,000 261,000
Budgeted overhead
Fixed factory overhead $ 1,809,600 $ 1,809,600 $ 1,809,600
Variable factory overhead $ 994,700 $ 1,136,800 $ 1,278,900
During the current quarter, the company operated at 70% of capacity and produced 40,600 units of product; actual direct labor totaled 201,900 hours. Units produced were assigned the following standard costs:
Direct materials (1,136,800 Ibs. @ $3.00 per Ib.) $ 3,410,400
Direct labor (203,000 hrs. @ $8.50 per hr.) 1,725,500
Factory overhead (203,000 hrs. @ $12.70 per hr.) 2,578,100
Total standard cost $ 7,714,000
Actual costs incurred during the current quarter follow:
Direct materials (1,083,800 Ibs. @ $3.27) $ 3,544,026
Direct labor (201,900 hrs. @ $8.29) 1,673,751
Fixed factory overhead costs 1,761,600
Variable factory overhead costs 959,025
Total actual costs $ 7,938,402
a) Compute the variable overhead spending and efficiency variances.