solveBest Fender is a competitor of Great Fender. Best Fender also uses a standard cost system and provide the following information:
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fixed overhead, $; actual direct labor hours,
Read the requirements.
Requirements
Requirement Compute the overhead variances for the year: variable overhead cost variance, variable overhead efficiency variance, fixed overhead
Compute the overhead variances for the year: variable overhead
cost variance, variable overhead efficiency variance, fixed overhead
cost variance, and fixed overhead volume variance.
Begin with the variable overhead cost and efficiency variances. Select the required formulas, compute the variable overhead cost and efficiency varian
Explain why the variances are favorable or unfavorable.
used: actual cost; actual quantity; FOH fixed overhead; standard cost; standard quantity; VOH variable overhead.
Now compute the fixed overhead cost and volume variances. Select the required formulas, compute the fixed overhead cost and volume variances, an
actual cost; actual quantity; FOH fixed overhead; standard cost; standard quantity.
Requirement Explain why the variances are favorable or unfavorable.
The variable overhead cost variance is
because management spent more' than budgeted for the actual production.
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