Gleason Company has developed the following standard cost data based on 60,000 direct labor hours, which is
Question:
Gleason Company has developed the following standard cost data based on 60,000 direct labor hours, which is 75% of capacity. Fixed overhead is $360,000 and variable overhead is $180,000 at this level of activity.
Per Unit | |
Direct material (3 lbs. @ $2.00/1b.) ………… | $ 6.00 |
Direct labor (0.5 hrs. @ $8.00/hr. ) …………. | 4.00 |
Variable overhead (0.5 hrs. @ $3.00/hr.) …… | 1.50 |
Fixed overhead (0.5 hrs. @ $6.00/hr.) ……… | 3.00 |
Total standard cost ………...………...……… | $14.50 |
During the current period, the company operated at 80% of capacity and produced 128,000 units. Actual costs were:
Direct material (380,000 lbs.) ……………. | $779,000 |
Direct labor (63,000 hrs.) …………………. | 507,150 |
Fixed overhead …………….……………… | 365,000 |
Variable overhead ………………………… | 220,000 |
Calculate the variable overhead spending and efficiency variance and the fixed overhead spending and volume variances. Indicate whether each is favorable or unfavorable.
Introduction to Managerial Accounting
ISBN: 978-1259105708
5th Canadian edition
Authors: Peter C. Brewer, Ray H. Garrison, Eric Noreen, Suresh Kalagnanam, Ganesh Vaidyanathan