Question

Crystal Glassware Company has the following standards and flexible-budget data.       Standard variable-overhead rate $...

Crystal Glassware Company has the following standards and flexible-budget data.

  

  
Standard variable-overhead rate $ 6.00 per direct-labor hour
Standard quantity of direct labor 2 hours per unit of output
Budgeted fixed overhead $ 120,000
Budgeted output 20,000 units

  

Actual results for April are as follows:

  

  
Actual output 14,000 units
Actual variable overhead $ 252,000
Actual fixed overhead $ 111,000
Actual direct labor 40,000 hours

Required:

Use the variance formulas to compute the following variances. (Indicate the effect of each variance by selecting "Favorable" or "Unfavorable". Select "None" and enter "0" for no effect (i.e., zero variance).)

1. variable-overhead spending variance

2. variable-overhead efficiency variance

3. fixed-overhead budget variance

4. fixed-overhead volume variance

Homework Answers

Answer #1
Particulars Formula & Solutions
1. Variable overhead spending variance. = Actual Variable Overhead - (AH-SVR)
= 252000 - (40000*6)
= 12000 U
2. Variable overhead efficiency variance. = (SVR) (AH-SH)
= 6 12000
= 72000
14000 units into 2hrs per unit = 28000 U
3. Fixed overhead budget variance. = Actual fixed Overhead - Budget Fixed Overhead
= 111000 - 120000
= 9000 F
4. Fixed overhead volume variance. = Budgeted fixed Overhead - Applied Fixed Overhead
Budgeted Units
Budgeted fixed Overhead = 120000 - 168000
Budgeted Units
= 48000 F
=
St hR Rate Standard hours Allowed
=
Applied Fixed Overhead = 6 * 28000
= 168000
Note : all Amounts in $
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