Cha Chapter 24: Standard Costing and Variance Analysis LO5 Overhead Variances SE
ID: 2404990 • Letter: C
Question
Cha Chapter 24: Standard Costing and Variance Analysis LO5 Overhead Variances SE8. Meanwhile Products uses standard costing. The following information about over- head was generated during August: Standard variable overhead rate Standard fixed overhead rate Actual variable overhead costs Actual fixed overhead costs Budgeted fixed overhead costs Standard machine hours per unit produced Good units produced $2.50 per machine hour $3.00 per machine hour $60,100 $68,800 $70,000 2.8 8,000 24,200 Actual machine hours Compute the variable overhead spending and efficiency variances and the fixed overhead budget and volume variances.Explanation / Answer
Solution:
Variable overhead spending variance = Actual variable overhead cost - AH x SR
= $60,100 - 24,200 x $2.50
= $60,100 - $60,500
= $400 Fav.
variable efficiency variance = AH x SR - SH x SR
= 24,200 x $2.50 - 8,000 x 2.8 x $2.50
= $60,500 - $56,000
= $4500 Unfav.
Fixed overhead budget variance = Actaul fixed overhead cost - Budgeted fixed overhead cost
= $68,800 - $70,000
= $1200 Fav.
Fixed overhead volume variance = Budgeted fixed overhead cost - SH x SR
= $70,000 - 8,000 x 2.8 x $3
= $2800
= 24,200 x $3 - 8,000 x