Variable Overhead Variances Assume that the best cost driver that Sony has for v
ID: 2479808 • Letter: V
Question
Variable 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 580,000 machine hours and $6,000,000 for its Texas plant's assembly department. The actual variable overhead incurred was $6,200,000, which was related to 600,000 machine hours. Do not round until your final answers. Round your answers to the nearest dollar.
(a) Determine the variable overhead spending variance.
(b) Determine the variable overhead efficiency variance.
Explanation / Answer
STANDARD HOURLY RATE
= $6000000 / 580000
= $10.3448
ACTUAL HOURLY RATE
= $6200000 / 600000
= $10.3333
A./
VARIABLE OVERHEAD SPENDING VARIANCES
= ACTUAL HOUR (ACTUAL RATE - STANDARD RATE)
= 600000 ($10.3333 - $10.3448)
= $6900 UNFAVOURABLE
B./
VARIABLE OVERHEAD EFFICIENCY VARIANCE
= STANDARD RATE (ACTUAL HOUR - STANDARD HOUR)
= $10.3448 (600000 - 580000)
= $206896 FAVOURABLE
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.