value: 2.00 points E9-11 Calculating Variable Manufacturing Overhead Variances [
ID: 2530045 • Letter: V
Question
value: 2.00 points E9-11 Calculating Variable Manufacturing Overhead Variances [LO 9-5] Lamp Light Limited (LLL) manufactures lampshades. It applies variable overhead on the basis of direct labor hours. Information from LLL's standard cost card follows: Standard Standard Standard Quantity Rate Unit Cost 0.6 $0.80 $0.48 Variable manufacturing overhead During August, LLL had the following actual results 25,100 Units produced and sold Actual variable overhead9,500 Actual direct labor houns 16,100 Required: Compute LLL's variable overhead rate variance, variable overhead efficiency variance, and over-or underapplied variable overhead. (Do not round intermediate calculations. Indicate the effect of each variance by selecting "F" for FavorablelOverapplied and "U" for Unfavorable/Underapplied.) ariable Overhead Rate Variance Varlable Overhead Efficiency Variance Variable Overhead Spending VarianceExplanation / Answer
Answer:-
Standard cost = Standard rate hour*stanadard hour per unit*Actual units
=$.80 per hour *.60 standard hours per unit*25100 units
= $12048
Actual cost = $9500
Variable overhead efficiency variance = (Standard rate – Actual rate) * Actual hours
= ($.80 per hour - $9500/16100 hours)* 16100 hours
= $3381 Favourable
Variable overhead spending variance=(Standard hours-Actual hours)*Standard rate per hour
=(15060 hours – 16100 hours)*$.80 per hour
= $832 Unfavourable
Where:-
Standard hours = Standard hours per unit*Actual units
=.60 standard hours per unit*25100 units
= 15060 hours
Variable overhead cost variance = Standard cost – Actual cost
= $12048-$9500 = $2548 Favourable
Variable overhead cost variance = Spending varaiance + Efficiency varaiance
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