Prichard Company Has Developed the Following Standard Cost Data Based

question 12

Essay

Prichard Company has developed the following standard cost data based on 60,000 direct labor hours, which is 75% of capacity.Fixed overhead is $360,000 and variable overhead is $180,000 at this level of activity.
$\begin{array}{lr}& \underline{ \text { Per Urit} }\\\text { Direct material (3lbs.@, } \$ 2.00 / 1 \mathrm{~b}) & \$ 6.00 \\\text { Direct labor }(0.5 \mathrm{hrs} @ \$ 8.00 / \mathrm{hr}) & 4.00 \\\text { Variable overhead (0.5hrs. } @ 3.00 \mathrm{hr} \text {.) } & 1.50 \\\text { Fixed overhead (0.5 hrs.@.\$6.00/hrs.) } & \underline{3.00}\\\text {Total stardard cost }& \underline{ \$ 14.50 }\end{array}$ During the current period, the company operated at 80% of capacity and produced 128,000 units.Actual costs were:
$\begin{array}{lr}\text { Direct material }(380,000 \mathrm{lbs} .) & \$ 779,000 \\\text { Direct labor }(63,000 \mathrm{hrs}) & 507,150 \\\text { Fixed overhead } & 365,000 \\\text { Variable overhead } & 220,000\end{array}$ Calculate the variable overhead spending and efficiency variance and the fixed overhead spending and volume variances.Indicate whether each is favorable or unfavorable.

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Definitions:

Market Segmentation

The strategy of dividing a broad target market into subsets of consumers with common needs, preferences, or characteristics, to then target them more effectively.

Effectively Segmented

Refers to a market that has been divided into distinct groups of buyers with different needs, characteristics, or behaviors, which may require separate products or marketing strategies.

Business Knows

The collective understanding and knowledge within a company regarding its operations, market environment, competition, and customer needs.

Core Target Market

The specific group of consumers identified as the most likely to buy a company's products or services, often defined by demographic, geographic, and psychographic characteristics.