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Question
Gleason 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.| Per Unit | |
| Direct material (3 lbs. @ $2.00/1b.) "u00a6"u00a6"u00a6"u00a6 | $ 6.00 |
| Direct labor (0.5 hrs. @ $8.00/hr. ) "u00a6"u00a6"u00a6"u00a6. | 4.00 |
| Variable overhead (0.5 hrs. @ $3.00/hr.) "u00a6"u00a6 | 1.50 |
| Fixed overhead (0.5 hrs. @ $6.00/hr.) "u00a6"u00a6"u00a6 | 3.00 |
| Total standard cost "u00a6"u00a6"u00a6..."u00a6"u00a6"u00a6..."u00a6"u00a6"u00a6 | $14.50 |
During the current period, the company operated at 80% of capacity and produced 128,000 units. Actual costs were:
| Direct material (380,000 lbs.) "u00a6"u00a6"u00a6"u00a6"u00a6. | $779,000 |
| Direct labor (63,000 hrs.) "u00a6"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6. | 507,150 |
| Fixed overhead "u00a6"u00a6"u00a6"u00a6"u00a6."u00a6"u00a6"u00a6"u00a6"u00a6"u00a6 | 365,000 |
| Variable overhead "u00a6"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6 | 220,000 |
Calculate the variable overhead spending and efficiency variance and the fixed overhead spending and volume variances. Indicate whether each is favorable or unfavorable.
Answer
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