Cedar Key Company produces handmade clamming buckets and sells them to distribut

Question

Cedar Key Company produces handmade clamming buckets and sells them to distributors alone the Gulf Coast of Florida. The company incurred $9,400 of actual overhead cots ($8,000 variable; $1,400 fixed) in May. Budgeted standard overhead costs for May were $4 of variable overhead costs per direct labor hour and $1,500 of fixed overhead costs. Normal capacity was set at 2,000 direct laor hours per month. In May, the company produced 10,100 clamming buckets by working 1,900 direct labor hours. The time standard is 0.2 direct labor hours per clamming bucket.

1. Compute the variable overhead spending and efficiency variances

2. compute the fixed overhead budget and volume variances for May

Explanation / Answer

1. Variable overhead spending variance

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