Surfs Up manufactures surf boards on the Big Island in Hawaii. The company\'s fo

ID: 2450263 • Letter: S

Question

Surfs Up manufactures surf boards on the Big Island in Hawaii. The company's founder and world-famous surfer, Danny Kehono, has an accounting degree from Upper Island State University. He understands the importance of standards for production control and planning. The following standard costing data are available for the current period: Actual fixed overhead $10,900 Actual variable overhead 66,100 Budgeted fixed overhead 11,500 Variable overhead rate per labor hour 6 Fixed overhead rate per labor hour 0.8 Standard hours allowed for actual production 13,100 Actual labor hours used 13,000

A. Calculate the variable overhead spending variance.

B. Calculate the variable overhead efficiency variance.

C. Calculate the fixed overhead spending variance.

D. Calculate the fixed overhead volume variance.

Explanation / Answer

BUDGETED

ACTUAL

STANDARD

FIXED OVERHEAD

11500

10900

(13000*0.8)=10400

VARIABLE OVERHEAD

13100*6=78600

66100

(13000*6)=78000

=66100-13000*6

=66100-78000

=11900(F)

2.) VARIABLE OVERHEAD EFFICIENCY VARIANCE=STANDARD HOURS* STANDARD VARIABLE OVERHEAD RATE PER HOUR-ACTUAL HOURS* STANDARD VARIABLE OVERHEAD RATE PER HOUR

13100*6-13000*6

=78600-78000=600(F)

3.) FIXED OVERHEA

D EXPENDITURE VARIANCE=ACTUAL FIXED OVERHEAD-BUDGETED FIXED OVERHEAD

=10900-11500

=600(F)

4.) FIXED OVERHEAD VOLUME VARIANCE=BUDGETED FIXED OVERHEAD-STANDARD FIXED OVERHEAD

=11500-10400

=1100(A)