Beluga Corp. has developed standard costs based on a predicted operating level of 352,000 units of production, which is 80% of capacity. Variable overhead is $281,600 at this level of activity, or $0.80 per unit. Fixed overhead is $440,000. The standard costs per unit are: Direct materials (0.5 lbs. @ $1/1b.) ……$0.50 per unitDirect labor (1 hour @ $10/hour) ……….$10.00 per unitOverhead (1 hour @ $2.05/hour) ………$2.05 per unitBeluga actually produced 330,000 units at 75% of capacity and actual costs for the period were:Direct materials (162,000 lbs.) ………. $ 170,100Direct labor (329,500 hours) ………….$3,360,900Fixed overhead ………………………… $ 438,000Variable overhead ……………………. $ 262,000Calculate the following variances and
indicate whether each variance is favorable or unfavorable:(1) Direct labor efficiency variance: $________(2) Direct materials price variance: $________(3) Controllable overhead variance: $________
What will be an ideal response?
| (1) | AH x SR (329,500 hr. x $10.00/hr.) | ? | $3,295,000 | ? |
| ? | SH x SR (330,000 hr.* x $10.00/hr.) | ? | 3,300,000 | ? |
| ? | Direct labor efficiency variance | ? | $ 5,000 | F |
| ? | *330,000 units x 1 hr./unit = 330,000 hr. | ? | ? | ? |
| ? | ? | ? | ? | ? |
| (2) | AQ x AP (162,000 lbs. x $1.05/lb.**) | ? | $ 170,100 | ? |
| ? | AQ x SP (162,000 lbs. x $1.00/lb.) | ? | 162,000 | ? |
| ? | Direct materials price variance | ? | $ 8,100 | U |
| ? | **$170,100/162,000 lbs. = $1.05/lb. | ? | ? | ? |
| ? | ? | ? | ? | ? |
| (3) | Actual overhead incurred: | ? | ? | ? |
| ? | Fixed overhead | $438,000 | ? | ? |
| ? | Variable overhead | 262,000 | $ 700,000 | ? |
| ? | Budgeted overhead at production level achieved: | ? | ? | ? |
| ? | Fixed overhead | $440,000 | ? | ? |
| ? | Variable overhead (330,000 hr. x $0.80/hr.) | 264,000 | 704,000 | ? |
| ? | Controllable overhead variance | ? | $ 4,000 | F |
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