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Dillard Inc has developed the following standard cost data based on 60000 direct labor hours, which is 75% of the firm’s capacity Fixed overhead is $360000 and variable overhead is

Dillard, Inc. has developed the following standard cost data based on 60,000 direct labor hours, which is 75% of the firm’s capacity. Fixed overhead is $360,000 and variable overhead is $180,000 at this level of activity.

Direct material (3 lbs. @ $2.00/lb.)

$ 6.00

Direct labor (0.5 hrs. @ $8.00/hr.)

4.00

Factory overhead (0.5 hrs. @ $9.00/hr.)

4.50

Total standard cost per unit

$14.50

During the last period, the company actually spent 62,000 direct labor-hours to produce 128,000 units and incurred the following manufacturing costs:

Actual Cost incurred

Direct material (380,000 lbs.)

$779,000

Direct labor (62,000 hrs.)

507,150

Fixed overhead

365,000

Variable overhead

220,000

Required:
Q1. Determine all variances for direct materials, direct labor, and factory overheads. Use the 4-variance method for factory overheads.
Q2. What are possible causes of each of the variances?

May 22 2020 View more View Less

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