Tiger, Inc. budgeted the following overhead costs for the current year assuming operations at 80% of capacity, or 40,000 units:Total variable overhead …………….$240,000Total fixed overhead ………………. 560,000Total overhead …………………….$800,000The standard cost per unit when operating at this same 80% capacity level is:Direct materials (5 lbs. @ $4/1b.) …………$20.00Direct labor (2 hrs. @ $8.75 hr.) ………….17.50Variable overhead (2 hrs. @ $3/hr.) …………6.00Fixed overhead (2 hrs. @ $7/hr.) …………. 14.00Total cost per unit ………………………….$57.50The actual production achieved in the current year was 60% of capacity, or 30,000 units. The actual costs were:Direct materials (150,350 lbs.) ………….$616,435Direct labor

(59,800 hrs.) ……………….520,260Variable overhead ………….……………192,000Fixed overhead ………….………….…...552,000 Calculate the following variances and indicate whether each is favorable or unfavorable.Direct materials:?  Price variance    Quantity variance  Direct labor:?  Rate variance    Efficiency variance  Variable overhead:?  Spending variance    Efficiency variance  Fixed overhead:?  Spending variance    Volume variance  

What will be an ideal response?

Direct materials:

AQ ? AP150,350 lbs. ? $4.10/lb.(1)$616,435
AQ ? SP150,350 lbs. ? $4.00/lb.601,400
Direct materials price variance……………………$ 15,035U
 (1)616,435/150,350 lbs. = $4.10/lb.

AQ ? SP150,350 lbs. ? $4.00/lb.$601,400
SQ ? SP150,000 lbs.(2) ? $4.00/lb.600,000
Direct materials quantity variance…………………$ 1,400U
 (2)30,000 units ? 5 lbs./unit = 150,000 lbs.

Direct labor:
AH ? AR59,800 hrs. ? $8.70/hr.(3)$520,260
AH ? SR59,800 hrs. ? $8.75/hr.523,250
Direct labor rate variance…………………………$ 2,990F
 (3)$520,260/59,800hr. = $8.70/hr.

AH ? SR59,800 hrs. ? $8.75/hr.$523,250
SH ? SR60,000 hr.(4) ? $8.75/hr.525,000
Direct labor efficiency variance…………………$ 1,750F
 (4)30,000 units ? 2 hrs/unit = 60,000 hrs.

Variable overhead:
Actual variable overhead (given)$192,000
AH ? SR59,800 hrs. x $3/hr.179,400
Variable overhead spending variance……………$ 12,600U

AH ? SR59,800 hrs. x $3/hr.$179,400
SH ? SR60,000 hrs. x $3/hr.180,000
Variable overhead efficiency variance……………$ 600F
Fixed overhead:
Actual fixed overhead (given)$552,000
Budgeted fixed overhead (given)560,000
Fixed overhead spending variance………………$ 8,000F

Budgeted fixed overhead$560,000
SH ? SR60,000 hrs. ? $7/hr.420,000
Fixed overhead volume variance…………………$140,000U

Business

You might also like to view...

One unique feature of projects is that they blend both:

A) Financial and behavioral challenges. B) Technical and temporal challenges. C) Technical and behavioral challenges. D) Financial and temporal challenges.

View
Business

A buyer can recover goods that are not unique and are wrongfully withheld by the seller through the remedy of

a. cover. b. replevin. c. cure. d. repossession.

View
Business

If a person dies without a will and without any heirs or next of kin, her property:

A) escheats to a vestry commission. B) vests in her neighbors. C) vests in her church. D) escheats to the state.

View
Business

Market segmentation theory would explain an upward sloping yield curve as a high demand for short-term securities relative to the supply

Indicate whether the statement is true or false.

View
Business