Rostand Inc. operates a delivery service for over 70 restaurants. The corporatio
ID: 2376838 • Letter: R
Question
Rostand Inc. operates a delivery service for over 70 restaurants. The corporation has a fleet of vehicles and has invested in a sophisticated, computerized communications system to coordinate its deliveries. Rostand has gathered the following actual data on last year's delivery operations:
Rostand employs a standard costing system. During the year, a variable overhead rate of $5.10 per hour was used. The labor standard requires 0.80 hour per delivery.
Assume that the actual fixed overhead was $403,400. Budgeted fixed overhead was $400,000, based on practical capacity of 32,000 direct labor hours.
1. Calculate the standard fixed overhead rate based on budgeted fixed overhead and practical capacity. Round your answer to two decimal places.
$ 12.50
2. Compute the fixed overhead spending and volume variances.
Spending variance $3,400
Volume variance:???
Spending variance $3,400
Volume variance:???
Rostand Inc. operates a delivery service for over 70 restaurants. The corporation has a fleet of vehicles and has invested in a sophisticated, computerized communications system to coordinate its deliveries. Rostand has gathered the following actual data on last year's delivery operations: Rostand employs a standard costing system. During the year, a variable overhead rate of $5.10 per hour was used. The labor standard requires 0.80 hour per delivery. Assume that the actual fixed overhead was $403,400. Budgeted fixed overhead was $400,000, based on practical capacity of 32,000 direct labor hours. Calculate the standard fixed overhead rate based on budgeted fixed overhead and practical capacity. Round your answer to two decimal places. $ 12.50 Compute the fixed overhead spending and volume variances.
Explanation / Answer
Hi,
Please find the answer as follows:
Standard DLH Needed = 38600*.80 = 30880 hours
Standard Fixed Overhead Rate Per Hour = 400000/32000 = 12.5 per labor hour.
Fixed Overhead Volume Variance = Budgeted Fixed Overhead - Applied Fixed Overhead = 12.5*32000 - 12.5*30880 = 14000 (U)
Answer is 14000 (U)
Thanks.
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