Question

Hellier Contractors paints interiors of residences and commercial structures. The firm's management has established cost standards per 100 square feet of area to be painted.

Direct material ($18 per gallon of paint)	$1.50
Direct labor	2.00
Variable overhead	0.60
Fixed overhead (based on 600,000 square feet per month)	1.25

Management has determined that 400 square feet can be painted by the average worker each hour. During May, the company painted 600,000 square feet of space and incurred the following costs:

Direct material (450 gallons purchased and used)	$ 8,300.00
Direct labor (1,475 hours)	12,242.50
Variable overhead	3,480.00
Fixed overhead	7,720.00

Answer the following questions related to the Manufacturing Overhead Variances.

Note: for the Variable overhead variances, use DLH as the allocation base.

15. Determine the Variable overhead spending variance (do not include a negative sign or words in your answer)

16. Was the Variable overhead spending variance favorable or unfavorable?

17. Determine the Variable overhead efficiency variance (do not include a negative sign or words in your answer)

18. Was the Variable overhead efficiency variance favorable or unfavorable?

19. Determine the Total Variable Overhead Variance (do not include a negative sign or words in your answer)

20. Was the Total Variable Overhead Variance favorable or unfavorable?

21. Determine the Fixed overhead spending variance (do not include a negative sign or words in your answer)

22. Determine the Volume variance (do not include a negative sign or words in your answer)

23. Determine the Total Fixed Overhead Variance (do not include a negative sign or words in your answer)

24. Was the Total Fixed Overhead Variance favorable or unfavorable?

25. Identify other cost drivers (other than SF) that could be used as a basis for measuring activity and computing variances for this company. Check all that could apply to this company.

Number of brush cleanings

number of hours of use of the paint spayers

number of hours worked

number of jobs worked per month

number of rooms painted

Answer 1

Solution:

15)

Variable Overhead Rate/Spending/Cost Variance
Actual Hourly Variable Overhead Rate ($3,480 / 1,475 Hours)	2.3593220	Per Hour
Standard Hourly Variable Overhead Rate	2.00	Per Hour
Variance or Difference in Rate	0.36	Per Hour
x Actual Hours Worked	1475	Hours
Variable Overhead Rate/Spending Variance	$530

16) Variable Overhead Spending Variance is Unfavorable because actual variable overheads are higher than what anticipated.

17)

Variable Overhead Efficiency/Quantity Variance
Standard Hours Allowed for actual production:
Actual Production	600,000	Square foot
/ Allowed Standard square feet per hour painted	400	Square foot
Total Standard Hours Allowed for actual production (SHAP)	1500	Hours
Actual Hours Worked (AH)	1475	Hours
Variance or Difference in Hours	25	hours
x Standard Hourly Variable Overhead Rate	$2.00	per hour
Variable Overhead Efficiency Variance	$50

18) Variable Overhead Efficiency Variance is Favorable because actual hours spent to paint is less than what anticipated.

19)

Total Variable Overhead Variance
Variable Overhead Spending Variance	$530	Unfavorable
Variable Overhead Efficiency Variance	$50	Favorable
Total Variable Overhead Variance	$480	Unfavorable

20)

Total Variable Overhead Variance is Unfavorable

Hope the above calculations, working and explanations are clear to you and help you in understanding the concept of question.... please rate my answer...in case any doubt, post a comment and I will try to resolve the doubt ASAP…thank you

Pls ask separate question for other parts problems