Woods, Inc.'s budget included the following overhead costs for the current year assuming operations at 80% of capacity, or 40,000 units:

The standard cost per unit when operating at this same 80% capacity level is:
$$\begin{array} { l r }
\text { Direct materials } ( 150,350 \mathrm { lbs } . ) & \$ 616,435 \
\text { Direct labor } ( 59,800 \mathrm { hrs } . ) & 520,260 \
\text { Variable overhead } & 192,000 \
\text { Fixed overhead } & 552,000
\end{array}$$
The actual production achieved in the current year was 60% of capacity, or 30,000 units. The actual costs were:
$\begin{array}{lr}
\text { Direct materials }(150,350 \text { lbs. }) & \$ 616,435 \
\text { Direct labor }(59,800 \text { hrs. }) & 520,260 \
\text { Variable overhead } & 192,000 \
\text { Fixed overhead } & 552,000
\end{array}$
Calculate the following variances and indicate whether each is favorable or unfavorable.

Question

Woods, Inc.'s budget included the following overhead costs for the current year assuming operations at 80% of capacity, or 40,000 units:

The standard cost per unit when operating at this same 80% capacity level is:
$$\begin{array} { l r } 
\text { Direct materials } ( 150,350 \mathrm { lbs } . ) & \$ 616,435 \
\text { Direct labor } ( 59,800 \mathrm { hrs } . ) & 520,260 \
\text { Variable overhead } & 192,000 \
\text { Fixed overhead } & 552,000
\end{array}$$
The actual production achieved in the current year was 60% of capacity, or 30,000 units. The actual costs were:
$\begin{array}{lr}
\text { Direct materials }(150,350 \text { lbs. }) & \$ 616,435 \
\text { Direct labor }(59,800 \text { hrs. }) & 520,260 \
\text { Variable overhead } & 192,000 \
\text { Fixed overhead } & 552,000
\end{array}$
Calculate the following variances and indicate whether each is favorable or unfavorable.

Quizplus · Accepted Answer

The Answer of Woods, Inc.'s budget included the following overhead costs for the current year assuming operations at 80% of capacity, or 40,000 units:

The standard cost per unit when operating at this same 80% capacity level is:
$$\begin{array} { l r } 
\text { Direct materials } ( 150,350 \mathrm { lbs } . ) & \$ 616,435 \
\text { Direct labor } ( 59,800 \mathrm { hrs } . ) & 520,260 \
\text { Variable overhead } & 192,000 \
\text { Fixed overhead } & 552,000
\end{array}$$
The actual production achieved in the current year was 60% of capacity, or 30,000 units. The actual costs were:
$\begin{array}{lr}
\text { Direct materials }(150,350 \text { lbs. }) & \$ 616,435 \
\text { Direct labor }(59,800 \text { hrs. }) & 520,260 \
\text { Variable overhead } & 192,000 \
\text { Fixed overhead } & 552,000
\end{array}$
Calculate the following variances and indicate whether each is favorable or unfavorable.

Woods, Inc The Actual Production Achieved in the Current Year Was 60