Compute variable overhead cost, spending and efficiency variance and fixed overh
ID: 2404005 • Letter: C
Question
Compute variable overhead cost, spending and efficiency variance and fixed overhead cost, spending and volume variance.
3. Gates Company collected the following data regarding production of one of its product Compute the variable overhead cost variance, the variable overhead spending the variable overhe overhead s variance, ad efficiency variance, the fixed overhead cost variance, the fixed pending variance, and the fixed overhead volume variance Direct labor standard (2 hrs. $15 hr.) Actual direct labor hours Budgeted units Actual finished units produced Standard variable OH rate (2 hrs. $14.00 hr.) Standard fixed OH rate ($310.000 31.000 units) Actual cost of variable overhead costs incurre Actual cost of fixed overhead costs incurred $30.00 per finished unit 60,800 hrs 31.000 units 30,000 units $28.00 per finished unit $10.00 per unit $857.600 $312.000Explanation / Answer
Absorbed variable overheads = Actual output x Standard overhead rate per unit
= 30,000 x 28
= $840,000
Actual variable overheads = $857,600
Standard variable overheads = Standard output x Standard overhead rate per unit
= 31,000 x 28
= $868,000
Variable overhead cost variance = Absorbed variable overheads - Actual variable overheads
= 840,000 - 857,600
= $17,600 (unfavorable)
Variable overhead spending variance = Standard variable overheads - Actual variable overheads
= 868,000 - 857,600
= $10,400 (favorable)
Variable overhead efficiency variance = Absorbed variable overheads - Standard variable
overheads
= 840,000 - 868,000
= 28,000 (unfavorable)
Absorbed fixed overheads = Actual output x Standard overhead rate per unit
= 30,000 x 10
= $300,000
Actual fixed overheads = $312,000
Budgeted fixed overheads = Budgeted output x Standard overhead rate per unit
= 31,000 x 10
= $310,000
Fixed overhead cost variance = Absorbed fixed overheads - Actual fixed overheads
= 300,000 - 312,000
= 12,000 (unfavorable)
Fixed overhead spending variance = Budgeted fixed overheads - Actual fixed overheads
= 310,000 - 312,000
= 2,000 (unfavorable)
Fixed overhead volume variance = Absorbed fixed overheads - Budgeted fixed overheads
= 300,000 - 310,000
= $10,000 (unfavorable)
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