Parker Plastic, Inc., manufactures plastic mats to use with rolling office chairs. Its standard cost information for last year follows:
Standard
Quantity
12 sq ft.
0.5 hr.
0.5 hr.
Direct materials (plastic)
Direct labor
Variable manufacturing overhead
(based on direct labor hours)
Fixed manufacturing overhead
($576,000+ 960,000 units)
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
Direct labor cost
Variable overhead cost
Fixed overhead cost
Standard
Standard Price (Rate) Unit Cost
$0.69 per sq. ft. $ 8.28
$10.40 per hr.
5.20
$ 0.90 per hr.
0.45
1,060,000
12,190,000
$ 8,167,300
525,000
$
S
$
5,250,000
525,000
562,000
0.60
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, "U" for unfavorable, and "None" for no effect (i.e., zero variance).)