Question:
GG Tire Co. manufactures automobile tires. Standard costs and actual costs for direct materials, direct labor, and factory overhead incurred for the manufacture of 20,000 tires was as follows:
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Standard Costs
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Actual Costs
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Direct Materials
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200,000 pounds @ $4.20
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220,000 pounds @ $4.00
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Direct Labor
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6,000 hours at $18.00
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6,200 hours at $19.00
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Factory Overhead
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Rates per direct labor hour,
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Based on 100% of normal
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Capacity of 10,000 direct labor
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Hours:
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Variable Cost, $2.80
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$16,000 variable cost
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Fixed Cost, $4.00
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$40,000 fixed cost
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Each tire requires 0.30 hour of direct labor.
Required
1. Compute the direct material price and quantity variances
2. Compute the direct labor rate and efficiency variances
3. Compute variable overhead spending and efficiency variances
4. Compute the fixed overhead spending and production volume variances