Question

GreatGreat Fender allocates manufacturing overhead to production based on standard direct labor hours. GreatGreat Fender reported...

GreatGreat

Fender allocates manufacturing overhead to production based on standard direct labor hours.

GreatGreat

Fender reported the following actual results for

2016​:

actual number of fenders​ produced ,20,000​;

actual variable​ overhead,$5,300​;

actual fixed​ overhead,$27,000​;

actual direct labor​ hours,370.

Read the requirements

.

Requirement 1. Compute the overhead variances for the​ year: variable overhead cost​ variance, variable overhead efficiency​ variance, fixed overhead cost​ variance, and fixed overhead volume variance.

Begin with the variable overhead cost and efficiency variances. Select the required​ formulas, compute the variable overhead cost and efficiency​ variances, and identify whether each variance is favorable​ (F) or unfavorable​ (U). ​(Abbreviations used: AC​ = actual​ cost; AQ​ = actual​ quantity; FOH​ = fixed​ overhead; SC​ = standard​ cost; SQ​ = standard​ quantity; VOH​ = variable​ overhead.)

Formula

Variance

VOH cost variance

=

=

  

VOH efficiency variance

=

=

Formula

Variance

FOH cost variance

=

Actual FOH - Budgeted FOH

=

-

=

  

FOH volume variance

=

Bugeted FOH - Allocated FOH

=

  

-

=

Static budget variable overhead

$4,608

Static budget fixed overhead

$23,040

Static budget direct labor hours

576

hours

Static budget number of units

24,000

units

Standard direct labor hours

0.024

hours per fender

Thank you and have a good day

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