Question

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

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	$