Exercise 16-44 Comprehensive Cost Variance Analysis (LO 16-5, 6)

NSF Lube is a fast-growing chain of oil-change stores. The following data are available for last years services:

NSF Lube performed 474,700 oil changes last year. It had budgeted 432,200 oil changes, averaging 15 minutes each.

Standard variable labor and support costs per oil change were as follows:

Direct oil specialist services: 15 minutes at $24 per hour	$	6.00
Variable support staff and overhead: 7.0 minutes at $18 per hour		2.1

Fixed overhead costs:

Annual budget $1,036,200

Fixed overhead is applied at the rate of $2.50 per oil change.

Actual oil change costs:

Direct oil specialist services: 474,700 changes averaging 13 minutes at $27 per hour	$	2,776,995
Variable support staff and overhead: 0.12 labor-hours at $16 per hour 474,700 changes		911,424
Fixed overhead		1,215,000

Required:

a. Prepare a cost variance analysis for each variable cost for last year. (Do not round intermediate calculations. Indicate the effect of each variance by selecting "F" for favorable, or "U" for unfavorable. If there is no effect, do not select either option.)

b. Prepare a fixed overhead cost variance analysis. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect.)