(Solution) - Correr Company manufactures a line of running shoes At the -(2025 Original AI-Free Solution)

Paper Details

Correr Company manufactures a line of running shoes. At the beginning of the period, the following plans for production and costs were revealed:
Units to be produced and sold ....... 25,000
Standard cost per unit:
Direct materials ............... $10
Direct labor ............... 8
Variable overhead ............. 4
Fixed overhead .............. 3
Total unit cost ............. $25
During the year, 30,000 units were produced and sold. The following actual costs were incurred:
Direct materials ...... $320,000
Direct labor ......... 220,000
Variable overhead ..... 125,000
Fixed overhead ....... 89,000
There were no beginning or ending inventories of direct materials. The direct materials price variance was $5,000 unfavorable. In producing the 30,000 units, a total of 39,000 hours were worked, 4 percent more hours than the standard allowed for the actual output. Overhead costs are applied to production using direct labor hours.

Required:
1. Prepare a performance report comparing expected costs with actual costs.
2. Determine the following:
a. Direct materials usage variance.
b. Direct labor rate variance.
c. Direct labor usage variance.
d. Fixed overhead spending and volume variances.
e. Variable overhead spending and efficiency variances.
3. Use T-accounts to show the flow of costs through the system. In showing the flow, you do not need to show detailed overhead variances. Show only the over- and underapplied variances for fixed and variable overhead.