You have started working as a cost accountant for a firm that has only been in business for one month. The firm is able to buy a new type of biodegradable plastic at a fixed price of $100 per roll. The plastic is then cut and sealed to make garbage bags. Fixed factory overhead is estimated to be $125,000 per month. During this past month, 8,000 cartons of garbage bags were produced, which represents 80% of the activity volume. You are given the following information:

Instructions
Calculate the following:

(a) Applied overhead per direct labour hour.

(b) Standard direct labour hours allowed for units produced.

(c) Activity volume.

(d) Predetermined fixed overhead rate.

(e) Fixed overhead applied.

(f) Variable overhead spending variance.

(g) Actual number of direct labour hours incurred.

(h) Labour efficiency variance.

(i) Materials quantity variance.

(j) Fixed overhead budget variance.

(k) Fixed overhead volume variance.

Transcribed Image Text:

Rolls of plastic used 40 Variable overhead incurred $61,000 Overhead efficiency variance Standard costs per carton of garbage bags: $5,000 U Labour hours Wage rate Total overhead Rolls of plastic $8 per hour $20 0.004 rolls