The following information applies to the questions displayed below Sedona Compan

Question

The following information applies to the questions displayed below Sedona Company set the following standard costs for one unit of its product for 2015. Direct material (30 lbs.$2.20 per lb.) Direct labor (20 hrs.@$4.20 per hr.) Factory variable overhead (20 hrs. @$2.20 per hr) Factory fixed overhead (20 hrs.@ $1.10 per hr.) $66.00 84.00 44.00 22.00 Standard cost $ 216.00 The $3.30 ($2.20+$110) total overhead rate per direct labor hour is based on an expected operating level equal to 60% of the factory's capacity of 68,000 units per month. The following monthly flexible budget information is also available. Operating Levels (% of capacity) 55% 60% 65% Flexible Budget Budgeted output (units) Budgeted labor (standard hours) Budgeted overhead (dollars) 37400 748,000 40,800 816,000 44,200 884,000 Variable overhead Fixed overhead $1,645,600 $1,795,200 1,944,800 897600 897,600 897,600 Total overhead $ 2,543,200 2,692,800 2,842,400

Explanation / Answer

Controllable variance =

Variable overhead spending variance = 728000 * 2.2 - actual $1625000 = $23400 UF

Variable overhead Efficiency variance = (748000 - 728000) 2.20 = $44000 F

Fixed overhead spending variance = 728000 * 1.10 - actual 924300 = $123500 UF

Fixed overhead spending variance = (748000 - 728000) 1.10 = $22000 F

Controllable variance = $80900 UF

reconciliation:

hours for actual units at 55% = 37400 * 20 = 748000

Total budgeted overhead at the actual output = 748000 * (2.20 + 1.10) = 2468400

Total actual overhead incurred =2549300

Controllable variance = $80900 UF

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