Problem 1
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The following standard costs were developed for one of the products of CH Industries:
STANDARD COST CARD
PER UNIT
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Direct materials: 4 feet x $14 per foot
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$ 56.00
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Direct labor: 8 hours x $10 per hour
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80.00
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Variable overhead: 8 hours x $8 per hour
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64.00
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Fixed overhead: 8 hours x $12 per hour
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96.00
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Total standard cost per unit
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$296.00
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The following information is available regarding the company's operations for the period:
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Units produced
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11,000
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Materials purchased & used
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40,000
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feet at $13.70 per foot
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Materials used
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40,000
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feet
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Direct labor
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84,000
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hours costing $840,000
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Variable OH
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mce_markernbsp; 650,000
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FOH
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mce_markernbsp; 1,050,000
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Required:
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a
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Calculate the variable overhead spending and efficiency variances and indicate whether it is favorable or unfavorable.
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b
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Calculate the fixed overhead spending and volume variances and indicate whether it is favorable or unfavorable. Assume the master budget called for fixed overhead is $1,520,000.
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