Understanding Relationships between Overhead Variances, Budgeted Amounts, and Ac
ID: 2554140 • Letter: U
Question
Understanding Relationships between Overhead Variances, Budgeted Amounts, and Actual Units Produced and Direct Labor Hours Worked Last year, Gladner Company had planned to produce 144,500 units. However, 145,945 units were actually produced. The company uses direct labor hours to assign overhead to products. Each unit requires 0.9 standard hour of labor for completion. The fixed overhead rate was $11 per direct labor hour and the variable overhead rate was $6.36 per direct labor hour.
The following variances were computed: Fixed overhead spending variance $24,000 U Variable overhead spending variance $9,196 U Fixed overhead volume variance 29,700 F Variable overhead efficiency variance 1,272 U Required: Round your answers to the nearest whole dollar.
1. Calculate the total applied fixed overhead. $1,444,856
2. Calculate the budgeted fixed overhead. $1,430,550
3. Calculate the actual fixed overhead. $ 1,454,550
4. Calculate the total applied variable overhead. $ 835,389
5. Calculate the number of actual direct labor hours. hrs 131,550
6. Calculate the actual variable overhead. $
I have the answers that are correct for all questions but #6. I have searched chegg on how to solve this but all the other questions are wrong can someone I have emailed my teacher and he said in order for it to be calcualted it is The Actual Variable Overhead = Budegeted Variable Overhead + Unfavorable Varaible Overhead Spending Variance. I but I dont under stand what that means can someone please help me
Explanation / Answer
Total Variable overhead variance =variable overhead spending variance+ variable overhead efficiency variance
= 9196 +1272
= 10468 U
Total Variable overhead variance =Actual variable overhead -Standard variable overhead
10468 = AVO - [Actual units produced * standard hours per unit *standard variable OH rate per hour]
10468 =AVO - [145945 *.9*6.36]
10468 = AVO - 835389.18
Actual variable overhead = 10468 +835389.18
= $ 845857.18 [Rounded to 845,857]
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