Exercise 16-45 Overhead Variances (LO 16-5, 6) Brice Corporation shows the follo

Question

Exercise 16-45 Overhead Variances (LO 16-5, 6) Brice Corporation shows the following overhead information for the current period: 1,050,600 ($276,300 fixed and $774,300 variable) S 281,400 (21,900 direct labor-hours budgeted) S 29.97 Actual overhead incurred Standard variable overhead rate per direct labor-hour Standard hours allowed for actual production Actual labor-hours used 25,500 hours 26,400 hours Required: What are the variable overhead price and efficiency variances and the fixed overhead price variance? (Indicate the effect of each variance by selecting "F" for favorable, or "U" for unfavorable. If there is no effect, do not select either option.) Variable overhead: Price variance Efficiency variance Fixed overhead: Price variance

Explanation / Answer

Variable overhead price variance=(AP*AQ)-(SP*AQ)
AP*AQ=774300
SP=29.97
AQ=26400
variance=774300-(29.97*26400)
=16908 and it is favourable

Efficency variance= (SP*AQ)-(SP*SQ)
=(29.97*26400)-(29.97*25500)
=26973 and it is Unfavourable

Fixed overhead= actual costs-budget costs
=276300-281400
=5100 and it is favourable

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