Exercise 16-44 Comprehensive Cost Variance Analysis (LO 16-5,6)
NSF Lube is a fast-growing chain of oil-change stores. Thefollowing data are available for last year’s services:
NSF Lube performed 467,700 oil changes last year. It hadbudgeted 435,000 oil changes, averaging 8 minutes each.
Standard variable labor and support costs per oil change were asfollows:
Direct oil specialist services: 8 minutes at $30 per hour $4.00
Variable support staff and overhead: 10.5 minutes at $20 perhour 3.5
Fixed overhead costs: Annual budget $1,039,000
Fixed overhead is applied at the rate of $3.90 per oilchange.
Actual oil change costs:
Direct oil specialist services: 467,700 changes averaging 11minutes at $34 per hour $ 2,915,330
Variable support staff and overhead: 0.22 labor-hours at $15 perhour Ă— 467,700 changes 1,543,410
Fixed overhead 1,425,000
a. Prepare a cost variance analysis for eachvariable cost for last year.
b. Prepare a fixed overhead cost varianceanalysis
I know the answer for b is:
Price Variance: $386,000 U
Production Volume Variance: $785,030 F
Fixed Overhead Cost Variance: $399,030 F
......But I can't figure out A: how to get thePrice Variance, Efficiency Variance or the total variance for boththe oil specialist and the variable overhead.
Any help would be appreciated.
