Problem 8-23B Computing materials, labor, and manufacturing overhead cost variances

Martin Hickey was a new cost accountant at Freeport Plastics Corporation. He was assigned to analyze the following data that his predecessor left him.

Required

1. Prepare a materials variance information table showing the standard price, the actual price, the standard quantity, and the actual quantity.

2. Calculate the materials price and usage variances and indicate whether they are favorable (F) or unfavorable (U).

3. Prepare a labor variance information table showing the standard price, the actual price, the standard hours, and the actual hours.

4. Calculate the labor price and usage variances and indicate whether they are favorable (F) or unfavorable (U).

5. Calculate the predetermined overhead rate, assuming that Freeport Plastics uses the number of units as the allocation base.

6. Calculate the fixed manufacturing overhead cost spending variance and indicate whether it is favorable (F) or unfavorable (U).

7. Calculate the fixed manufacturing overhead cost volume variance and indicate whether it is favorable (F) or unfavorable (U).

Planned volume for year (static budget) Standard direct materials cost per unit Standard direct labor cost per unit Total planned fixed overhead costs Actual volume for the year (flexible budget) Actual direct materials cost per unit Actual direct labor cost per unit Total actual fixed overhead costs 10,000 units 2 pounds @ $3.60 per pound 0.5 hour @ $30.00 per hour $24,000 10,800 units 1.9 pounds @ $3.84 per pound 0.6 hour @ $24.00 per hour $24,800