ariable Overhead Variances Assume that the best cost driver that Sony has for va
ID: 2467747 • Letter: A
Question
ariable Overhead Variances Assume that the best cost driver that Sony has for variable factory overhead in the assembly department is machine hours. During April, the company budgeted 480,000 machine hours and $4,000,000 for its Texas plant's assembly department. The actual variable overhead incurred was $4,180,000, which was related to 500,000 machine hours. Do not round until your final answers. Round your answers to the nearest dollar. (a) Determine the variable overhead spending variance. $ Answer 0 F U (b) Determine the variable overhead efficiency variance. $Answer 0 F U Check Next
Explanation / Answer
**Standard overhead rate = 4,000,000 / 480,000 = $ 8.33 per MH
Spending variance = AMH [AVOH -SVOH]
= 4,180,000 - [500,000 * 8.33]
= 4,180,000 - 4,166,666.67
= $ 13,333.33 U
Efficiency variance= 8.33 [500000 - 480000]
= 8.33 * 20000
= 166600 U
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