Raisen,Inc.'s budget included the following overhead costs for the current year assuming operations at 80% of capacity,or 40,000 units:
$\begin{array}{lr}
\text { Total variable overhead } & \$ 240,000 \
\text { Total fixed overhead } & \underline{560,000} \
\text { Total overhead } & \$ 800,000
\end{array}$

The standard cost per unit when operating at this same 80% capacity level is:
$\begin{array}{lr}
\text { Direct materials (5 lbs. @ } \$ 4 / \mathrm{lb} .) & \$ 20.00 \
\text { Direct labor (2 hrs. @ } \$ 8.75 / \mathrm{hr} \text {.) } & 17.50 \
\text { Variable overhead (2 hrs. @. } \$ 3 / \mathrm{hr} .) & 6.00\
\text { Fixed overhead (2 hrs. @\$7/hr.)}&14.00\
\text { Total cost per unit}&\$57.0
\end{array}$
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

Raisen,Inc.'s budget included the following overhead costs for the current year assuming operations at 80% of capacity,or 40,000 units:
 $\begin{array}{lr}
\text { Total variable overhead } & \$ 240,000 \
\text { Total fixed overhead } & \underline{560,000} \
\text { Total overhead } & \$ 800,000
\end{array}$
 
The standard cost per unit when operating at this same 80% capacity level is:
 $\begin{array}{lr}
\text { Direct materials (5 lbs. @ } \$ 4 / \mathrm{lb} .) & \$ 20.00 \
\text { Direct labor (2 hrs. @ } \$ 8.75 / \mathrm{hr} \text {.) } & 17.50 \
\text { Variable overhead (2 hrs. @. } \$ 3 / \mathrm{hr} .) & 6.00\
\text { Fixed overhead (2 hrs. @\$7/hr.)}&14.00\
\text { Total cost per unit}&\$57.0
\end{array}$ 
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 Raisen,Inc.'s budget included the following overhead costs for the current year assuming operations at 80% of capacity,or 40,000 units:
 $\begin{array}{lr}
\text { Total variable overhead } & \$ 240,000 \
\text { Total fixed overhead } & \underline{560,000} \
\text { Total overhead } & \$ 800,000
\end{array}$
 
The standard cost per unit when operating at this same 80% capacity level is:
 $\begin{array}{lr}
\text { Direct materials (5 lbs. @ } \$ 4 / \mathrm{lb} .) & \$ 20.00 \
\text { Direct labor (2 hrs. @ } \$ 8.75 / \mathrm{hr} \text {.) } & 17.50 \
\text { Variable overhead (2 hrs. @. } \$ 3 / \mathrm{hr} .) & 6.00\
\text { Fixed overhead (2 hrs. @\$7/hr.)}&14.00\
\text { Total cost per unit}&\$57.0
\end{array}$ 
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:

Raisen,Inc The Standard Cost Per Unit When Operating at This Same