Crystal Glassware Company has the following standards and flexible-budget data S

Question

Crystal Glassware Company has the following standards and flexible-budget data Standard variable-overhead rate Standard quantity of direct labor Budgeted fixed overhead Budgeted output 6.00 per direct-labor hour 3 hours per unit of output $150,000 25,000 units Actual results for April are as follows: Actual output Actual variable overhead Actual f Actual direct labor 16,000 units $384,000 $141,000 ixed overhead 55,000 hours Required Use the variance formulas to compute the following variances. (Indicate the effect of each variance by selecting "Favorable" or "Unfavorable". Select "N ne" and enter "0" for no effect (i.e., zero variance).) 1. Variable-overhead spending variance 2. Variable-overhead efficiency variance 3. Fixed-overhead budget variance 4. Fixed-overhead volume variance

Explanation / Answer

(a) Variable O/H Spending variance = Actual Hrs worked (Actual rate - Standard rate)

= 55000(384000/55000 - 6)

= 54000 unfavorable

(b) Variable O/H efficiency variance = (Actual hours - Standard hours)* Standard o/h rate

= (55000 - 16000*3) x 6

= 42000 Unfavorable

(c) Fixed O/h budget variance = Actual fixed o/h - Budgeted fixed o/h

= 141000 - 150000 = 9000 Favorable

(d) Fixed o/h volume variance = Absorbed Fixed o/h - budgeted fixed o/h

= 16000*6* - 25000*6 = 54000 Unfavorable

*Absorption rate = Fixed o/h / budgeted qty = 150000/25000 = 6

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