Tuna Company set the following standard unit costs for its single product.
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Direct materials (27 Ibs. @ $4 per Ib.)
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$
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108.00
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Direct labor (8 hrs. @ $8 per hr.)
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64.00
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Factory overhead-variable (8 hrs. @ $5 per hr.)
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40.00
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Factory overhead-fixed (8 hrs. @ $7 per hr.)
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56.00
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Total standard cost
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$
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268.00
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The predetermined overhead rate is based on a planned operating volume of 60% of the productive capacity of 40,000 units per quarter. The following flexible budget information is available.
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Operating Levels
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50%
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60%
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70%
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Production in units
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20,000
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24,000
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28,000
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Standard direct labor hours
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160,000
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192,000
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224,000
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Budgeted overhead
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Fixed factory overhead
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$
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1,344,000
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$
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1,344,000
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$
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1,344,000
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Variable factory overhead
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$
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800,000
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$
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960,000
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$
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1,120,000
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During the current quarter, the company operated at 70% of capacity and produced 28,000 units of product; actual direct labor totaled 222,000 hours. Units produced were assigned the following standard costs:
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Direct materials (756,000 Ibs. @ $4 per Ib.)
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$
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3,024,000
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Direct labor (224,000 hrs. @ $8 per hr.)
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1,792,000
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Factory overhead (224,000 hrs. @ $12 per hr.)
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2,688,000
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Total standard cost
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$
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7,504,000
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|
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Actual costs incurred during the current quarter follow:
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Direct materials (751,000 Ibs. @ $4.10)
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$
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3,079,100
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Direct labor (222,000 hrs. @ $7.75)
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1,720,500
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Fixed factory overhead costs
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1,968,679
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Variable factory overhead costs
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1,843,019
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|
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Total actual costs
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$
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8,611,298
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Compute the direct labor variance, including its rate and efficiency variances.
Compute the overhead controllable and volume variances.