P23-4A (Req. 1 & 2 only) Problem 23-4A Computation of materials, labor, and overhead variances Trico Company set the following standard unit costs for its single product. $120 70 Direct materials (30 lbs.@$4 per lb.) Direct labor (5 hrs.@ $14 per hr.) Factory overhead-variable (5 hrs. @ $8 per hr) 40 Factory overhead- fixed (5 hrs. @ $10 per hr.) 50 Total standard cost The predetermined overhead rate is based on a planned operating volume of 80% of the productive capacity of 60,000 units per quarter. The following flexible budget $280 information is available. Operating Levels 54,000 42,000 48,000 Production in units Standard direct labor hours 210,000 240,000 270,000 Budgeted overhead Fixed factory overhead $2,400,000 $2,400,000 $2,400,000 Variable factory overhead $1,680,000 $1,920,000 $2,160,000 During the current quarter, the company operated at 90% of capacity and produced 54,00o units of product; actual direct labor totaled 265,000 hours. Units produced were assigned the following standard costs. Direct materials (1,620,000 lbs.@$4 per lb.) 6,480,000 Direct labor (270,000 hrs.@ $14 per hr.) Factory overhead (270,000 hrs.@ $18 per hr.)4860.000 Total standard cost Actual costs incurred during the current quarter follow. 3,780,000 $15,120,000 Direct materials (1,615,000 lbs.@ $4.10 per lb.) $ 6,621,500 Direct labor (265,000 hrs. @ $13.75 per hr.) Fixed factory overhead costs Variable factory overhead costs Total actual costs 3,643,750 2,350,000 2,200.000 $14,815,250 Required 1. Compute the direct materials cost variance, including its price and quantity variances Check (1) Materials variances: Price, $161,500 U; Quantity, $20,000 F Compute the direct labor cost variance, including its rate and efficiency variances. (2) Labor variances: Rate, $66,250 F: Efficiency, $70,000 F 2