Woods, Inc. budgeted the following overhead costs for the current year assuming operations at 80% of capacity, or 40,000 units:
Total variable overhead........
$240,000
Total fixed overhead...........................................
560,000
Total overhead...................................................
$800,000
The standard cost per unit when operating at this same 80% capacity level is:
Direct materials (5 lbs. @ $4/lb.).........................
$20.00
Direct labor (2 hrs. @ $8.75/hr.)..........................
17.50
Variable overhead (2 hrs. @ $3/hr.).....................
6.00
Fixed overhead (2 hrs. @ $7/hr.).........................
14.00
Total cost per unit...............................................
$57.50
The actual production achieved in the current year was 60% of capacity, or 30,000 units. The actual costs were:
Direct materials (150,350 lbs.).............................
$616,435
Direct labor (59,800 hrs.)....................................
520,260
Variable overhead..............................................
192,000
Fixed overhead...................................................
552,000
Calculate the following variances and indicate whether each is favorable (F) or unfavorable (U).
a. The material price variance and the material quantity variance.
b. The labor rate variance and the labor efficiency variance.
c. The variable overhead spending variance and the efficiency variance.
d. The fixed overhead spending variance and the volume variance.