FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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NSF Lube is a fast-growing chain of oil-change stores. The following data are available for last year's services.
• NSF Lube performed 469,200 oil changes last year. It had budgeted 434,400 oil changes, averaging 12 minutes each.
• Standard variable labor and support costs per oil change were as follows.
Direct oil specialist services: 12 minutes at $25 per hour
Variable support staff and overhead: 10.5 minutes at $20 per hour
$5.00
3.50
Fixed overhead costs:
Annual budget $1,038,400
• Fixed overhead is applied at the rate of $2.40 per oll change.
• Actual oil change costs:
Direct ofl specialist services: 469, 200 changes averaging 19 minutes at $28 per hour
Variable support staff and overhead: 0.19 labor-hours at $18 per hour x 469, 200 changes
Fixed overhead
$4,160, 240
1,604,664
1,380,000
Required:
a. Prepare a cost variance analysis for each variable cost for last year.
b. Prepare a fixed overhead cost variance analysis.
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Transcribed Image Text:NSF Lube is a fast-growing chain of oil-change stores. The following data are available for last year's services. • NSF Lube performed 469,200 oil changes last year. It had budgeted 434,400 oil changes, averaging 12 minutes each. • Standard variable labor and support costs per oil change were as follows. Direct oil specialist services: 12 minutes at $25 per hour Variable support staff and overhead: 10.5 minutes at $20 per hour $5.00 3.50 Fixed overhead costs: Annual budget $1,038,400 • Fixed overhead is applied at the rate of $2.40 per oll change. • Actual oil change costs: Direct ofl specialist services: 469, 200 changes averaging 19 minutes at $28 per hour Variable support staff and overhead: 0.19 labor-hours at $18 per hour x 469, 200 changes Fixed overhead $4,160, 240 1,604,664 1,380,000 Required: a. Prepare a cost variance analysis for each variable cost for last year. b. Prepare a fixed overhead cost variance analysis.
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