Question : 11.Palek Company has adopted the following standards: Input Total Direct materials3 lbs. @ : 1416273

 

11.Palek Company has adopted the following standards:

 

Input  Total

Direct materials3 lbs. @ $3.60 per lb.$10.80

Direct labor5 hrs. @ $12.00 per hr.60.00

Factory overhead:

Variable$4.00 per direct labor hour20.00

Fixed$5.00 per direct labor hour25.0045.00

Standard cost per unit$115.50

 

Palek's January budget was based on normal volume of 40,000 standard labor hours.  During January, Palek produced 7,900 units with records indicating the following data:

 

Direct materials purchased25,000lbs. @ $3.65

Direct labor39,900hrs. @ $11.85

Factory overhead$375,000

Fixed factory overhead$210,000

 

Assuming Palek uses the three-variance method of analyzing factory overhead, compute the following variances for the month of January and indicate whether each is favorable or unfavorable:

 

a.Factory overhead budget variance

b.Factory overhead capacity variance

c.Factory overhead efficiency variance