Question

Answer questions 18-21 using the information below:

Thinnews Co., uses machine hours to allocate manufacturing overhead cost to outputs:

Actual total overhead cost incurred	$	24,000
Actual fixed overhead cost incurred	$	10,000
Budgeted fixed overhead cost	$	11,000
Actual machine hours		5,000
Standard machine hours allowed for the units manufactured		4,800
Denominator level — machine hours		5,500
Standard variable overhead rate per machine hour	$	3.00

What is variable overhead spending variance?

Group of answer choices

$960 favorable

$1,000 favorable

$1,100 favorable

$1,400 unfavorable

Flag this Question

Question 191 pts

What is variable overhead efficiency variance?

Group of answer choices

$1,500 favorable

$2,100 unfavorable

$560 unfavorable

$600 unfavorable

Flag this Question

Question 201 pts

What is fixed overhead spending variance?

Group of answer choices

$3,000 unfavorable

$3,000 favorable

$1,000 unfavorable

$1,000 favorable

Flag this Question

Question 211 pts

What is production volume variance?

Group of answer choices

$2,400 favorable

$1,000 unfavorable

$1,500 unfavorable

$1,400 unfavorable

Answer 1

Solution 1:

Actual rate of variable overhead = ($24,000 - $10,000) / 5000 = $2.80 per machine hour

Variable overhead spending variance = (SR - AR) * AH = ($3 - $2.80) * 5000 = $1,000 F

Hence 2nd option is correct.

Solution 2:

Variable overhead efficiency variance = (SH - AH) *SR = (4800 - 5000) *$3 = $600 U

Hence last option is correct.

Solution 3:

Fixed overhead spending variance = Budgeted fixed overhead - Actual fixed overhead

= $11,000 - $10,000 = $1,000 F

Hence last option is correct.

Solution 4:

Production volume variance = Fixed overhead applied - Budgeted fixed overhead

= (4800*$2) - $11,000 = $1,400 U

Hence last option is correct.