Standard DLH per unit 2.5 hours Variable overhead per DLH $1.75 Fixed overhead p
ID: 2423818 • Letter: S
Question
Standard
DLH per unit
2.5
hours
Variable overhead per DLH
$1.75
Fixed overhead per DLH
$3.10
Budgeted variable overhead
$21,875
Budgeted fixed overhead
$38,750
Budgeted DLH
12,500
Hours
Actual
Direct labor hours
10,000
DLH
Variable overhead cost
$26,250
Fixed overhead cost
$38,000
Required: Calculation of Overhead Variances.
Variable overhead spending variance
$4,375.00
U
Variable overhead efficiency variance
Fixed overhead spending variance
$750.00
F
Fixed overhead volume variance
Standard
DLH per unit
2.5
hours
Variable overhead per DLH
$1.75
Fixed overhead per DLH
$3.10
Budgeted variable overhead
$21,875
Budgeted fixed overhead
$38,750
Budgeted DLH
12,500
Hours
Actual
Direct labor hours
10,000
DLH
Variable overhead cost
$26,250
Fixed overhead cost
$38,000
Required: Calculation of Overhead Variances.
Variable overhead spending variance
$4,375.00
U
Variable overhead efficiency variance
?Fixed overhead spending variance
$750.00
F
Fixed overhead volume variance
?Explanation / Answer
Variable Overhead Efficiency variance (SH-AH)*SR ((21875/2.5)-10000)*1.75 -2187.5 Unfavourable Ans SH are standard direct labor hours allowed AH are the actual direct labor hours SR is the standard variable overhead rate sh=Budgeted variable overhead/direct labour hours per unit Fixed Overhead Volume Variance = Absorbed Fixed overheads - Budgeted Fixed Overheads = Actual Output x FOAR* - Budgeted Output x FOAR* * Fixed Overhead Absorption Rate per unit of output Budgeted Fixed Overhead $38,750 Absorbed=10000*3.1 31000 $7,750 Favourable Ans
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