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
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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