The following standard costs were developed for one of the products of ABC Company:
STANDARD COST CARD PER UNIT
Direct materials: 20 pounds x $10 per pound .................................. $200.00
Direct labor: 2 hours x $17 per hour .................................................... 34.00
Variable overhead: 2 hours x $10 per hour .......................................... 20.00
Fixed overhead: 2 hours x $8 per hour ................................................ 16.00
Total standard cost per unit ............................................................. $ 270.00

The following information is available regarding the company's operations for the period:

Budgeted fixed overhead for the period is $880,000, and the standard fixed overhead rate is based on an expected capacity of 110,000 direct labor hours.

Required:
a. Calculate the materials price variance and material usage variance; indicate whether it is favorable or unfavorable.
b. Calculate the labor rate variance and labor efficiency variance; indicate whether it is favorable or unfavorable.
c. Calculate the variable overhead spending variance and variable overhead efficiency variance; indicate whether it is favorable or unfavorable.
d. Calculate the fixed overhead spending variance and the fixed overhead volume variance; indicate whether it is favorable orunfavorable.

Transcribed Image Text:

Units produced Materials purchased Materials used Direct labor Overhead incurred 50,000 1,100,000 1,110,000 Lbsat S10.25 per pound pound 95,000 at S17.50 per direct labor hour Variable S1,008,000 Fixed 898,000