Question

Rondell Company uses a standard cost system. Indirect costs were budgeted at $190,800 plus $13 per...

Rondell Company uses a standard cost system. Indirect costs were budgeted at $190,800 plus $13 per direct labour hour. The overhead rate is based on 10,600 hours. Actual results were:
Standard direct labour hours allowed 9,070
Actual direct labour hours 10,600
Fixed overhead $179,000
Variable overhead $174,400
Calculate the fixed overhead production volume variance.
Fixed overhead production volume variance $

Neither favourable nor unfavourableUnfavourableFavourable
Calculate the variable overhead spending variance.
Variable overhead spending variance $

Neither favourable nor unfavourableUnfavourableFavourable
Calculate the variable overhead efficiency variance.
Variable overhead efficiency variance $

Neither favourable nor unfavourableFavourableUnfavourable
Calculate the over- or underapplied overhead.
Overhead $

over-appliedunder-applied
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Homework Answers

Answer #1

1. Fixed overhead rate = 190800/10600 = $18

Fixed overhead volume variance = Applied Fixed overhead - Budgeted fixed overhead

= ($18*9070) - 190800

= $27540 F

2. Variable overhead Spending Variance = Actual variable overhead - (Actual hours * standard rate)

= $174400 - (10600*13)

= $36,600 U

3. Variable overhead Efficiency Variance = Standard rate*(Actual hours - standard hours allowed)

= $13 * (10600-9070)

= $19890 U

4.

Particulars Amount ($)
Actual overhead (179000+174400) 353400
Applied overhead (10600*13)+(18*9070) 301060
Overhead Under applied 52340
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