Parker Plastic, Inc., manufactures plastic mats to use with rolling office chairs. Its standard cost information for last year follows:StandardStandardStandard Price (Rate)ft0.70 per sq.$10.45 per hr.Unit CostQuantity12 sq ft.0.55 hr.Direct materials (plastic)8.40Direct labor5.75Variable manufacturing overhead (based ondirect labor hours)Fixed manufacturing overhead $637,000980,000 units)0.95 per hr.0.55 hr.0.520.65Parker Plastic had the following actual results for the past year:Number of units produced and soldNumber of square feet of plastic usedCost of plastic purchased and usedNumber of labor hours worked1,080,00012,420,0008,445,600589,0005,919,450618,450624,000$Direct labor costVariable overhead costFixed overhead costRequired:Calculate Parker Plastic's fixed overhead spending and volume variances and its over- or underapplied fixed overhead. (Indicate the effect of each variance by selecting "F" for favorable/Overapplied and "U"for unfavorable/underapplied.)Fixed Overhead Spending VarianceFixed Overhead Volume VarianceOver- or Underapplied Fixed Overhead

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Asked Nov 5, 2019
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Parker Plastic, Inc., manufactures plastic mats to use with rolling office chairs. Its standard cost information for last year follows:
Standard
Standard
Standard Price (Rate)
ft
0.70 per sq.
$10.45 per hr.
Unit Cost
Quantity
12 sq ft.
0.55 hr.
Direct materials (plastic)
8.40
Direct labor
5.75
Variable manufacturing overhead (based on
direct labor hours)
Fixed manufacturing overhead $637,000
980,000 units)
0.95 per hr.
0.55 hr.
0.52
0.65
Parker Plastic had the following actual results for the past year:
Number of units produced and sold
Number of square feet of plastic used
Cost of plastic purchased and used
Number of labor hours worked
1,080,000
12,420,000
8,445,600
589,000
5,919,450
618,450
624,000
$
Direct labor cost
Variable overhead cost
Fixed overhead cost
Required:
Calculate Parker Plastic's fixed overhead spending and volume variances and its over- or underapplied fixed overhead. (Indicate the effect of each variance by selecting "F" for favorable/Overapplied and "U"
for unfavorable/underapplied.)
Fixed Overhead Spending Variance
Fixed Overhead Volume Variance
Over- or Underapplied Fixed Overhead
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Parker Plastic, Inc., manufactures plastic mats to use with rolling office chairs. Its standard cost information for last year follows: Standard Standard Standard Price (Rate) ft 0.70 per sq. $10.45 per hr. Unit Cost Quantity 12 sq ft. 0.55 hr. Direct materials (plastic) 8.40 Direct labor 5.75 Variable manufacturing overhead (based on direct labor hours) Fixed manufacturing overhead $637,000 980,000 units) 0.95 per hr. 0.55 hr. 0.52 0.65 Parker Plastic had the following actual results for the past year: Number of units produced and sold Number of square feet of plastic used Cost of plastic purchased and used Number of labor hours worked 1,080,000 12,420,000 8,445,600 589,000 5,919,450 618,450 624,000 $ Direct labor cost Variable overhead cost Fixed overhead cost Required: Calculate Parker Plastic's fixed overhead spending and volume variances and its over- or underapplied fixed overhead. (Indicate the effect of each variance by selecting "F" for favorable/Overapplied and "U" for unfavorable/underapplied.) Fixed Overhead Spending Variance Fixed Overhead Volume Variance Over- or Underapplied Fixed Overhead

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Expert Answer

Step 1

Calculate Parker Plastic's fixed overhead spending and volume variances and its over- or under applied fixed overhead:

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Amounts F or Particulars in (S) U Fixed Overhead $13,000 F Spending Variance Fixed Overhead $ 65,000 F Spending Variance Over or Under- $ 78,000 F applied Fixed Overhead

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Step 2

Workings:

Fixed overhead spending variance:

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Budgeted Fixed overheads Fixed Overhead Spending Variance -Actual Fixed overheads =$637,000-624,000 S13.000 F

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Step 3

Fixed Overhead volume Varia...

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Absorbed Fixed Overhead Fixed Overhead Volume Variance Budgeted Fixed Overheads (0.65 x 1,080,000) - $637,000 =$702.000 $637,000 =$65.000 F

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