80.2K

Verified Solution

Link Copied!

allocates manufacturing overhead to production based on standard direct labor hours. Good Deal reported the following actual results for 2018: actual number of units produced, 1 comma 000; actual variable overhead, $ 5000; actual fixed overhead, $ 2700; actual direct labor hours, 1900. Read the requirements

Requirement 1. Compute the variable overhead cost and efficiency variances and fixed overhead cost and volume variances. Begin with the variable overhead cost and efficiency variances. Select the required formulas, compute the variable overhead cost and efficiency variances, and identify whether each variance is favorable (F) or unfavorable (U). (Abbreviations used: AC = actual cost; AQ = actual quantity; FOH = fixed overhead; SC = standard cost; SQ = standard quantity; VOH = variable overhead.) Formula Variance VOH cost variance = = VOH efficiency variance = = Now compute the fixed overhead cost and volume variances. Select the required formulas, compute the fixed overhead cost and volume variances, and identify whether each variance is favorable (F) or unfavorable (U). (Abbreviations used: AC = actual cost; AQ = actual quantity; FOH = fixed overhead; SC = standard cost; SQ = standard quantity.) Formula Variance FOH cost variance = = FOH volume variance = = Requirement 2. Explain why the variances are favorable or unfavorable. The variable overhead cost variance is favorable unfavorable because the actual cost per direct labor hour was less more than the standard cost per direct labor hour. The variable overhead efficiency variance is favorable unfavorable because management used fewer more direct labor hours than standard and variable overhead is applied (incurred) based on direct labor. The fixed overhead cost variance is unfavorable favorable because the total fixed overhead cost was more less than the amount budgeted for total fixed overhead. The fixed overhead volume variance is unfavorable favorable because total fixed overhead cost allocated to units was less more than the total budgeted fixed overhead cost. Choose from any list or enter any number in the input fields and then continue to the next question.

Answer & Explanation Solved by verified expert

See Answer