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.
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.

Question

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.  
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.

Quizplus · Accepted Answer

The Answer of 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.  
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.

Prichard Company Has Developed the Following Standard Cost Data Based