Prichard Company Has Developed the Following Standard Cost Data Based

question 41

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.
$\begin{array}{lr}&\underline{\text { Per Unit }}\\\text { Direct material (3 lbs. @ } \$ 2.00 / 1 \mathrm{~b} \text { ) } & \$ 6.00 \\\text { Direct labor (0.5 hrs. @ } \$ 8.00 / \mathrm{hr} \text {.) } & 4.00 \\\text { Variable overhead (0.5 hrs. @ } \$ 3.00 / \mathrm{hr} \text {.) } & 1.50 \\\text { Fixed overhead (0.5 hrs. @ } \$ 6.00 / \mathrm{hrs}) & \underline{3.00} \\\text { Total standard cost } & \$ 14.50\end{array}$

During the current period,the company operated at 80% of capacity and produced 128,000 units.Actual costs were:
$\begin{array}{lr}\text { Direct material }(380,000 \text { lbs. }) & \$ 779,000 \\\text { Direct labor }(63,000 \mathrm{hrs}) & 507,150 \\\text { Fixed overhead } & 365,000 \\\text { Variable overhead } & 220,000\end{array}$

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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