Eathem Ware is a manufacturer of large flower pots for urban settings. The compa

Question

Eathem Ware is a manufacturer of large flower pots for urban settings. The company has these standards E Cick te ion to view the standrds) mokthe contoview te actual msults.) Requirements 1. Compute the variable manudacturing overhead variances. What do each of these variances tell management? 2. Compute the fxed manufacturing overhead variances. What do each of these variances tell management? Requirement 1.Compute the variable manufacturing overhead variances. What do each of these variances tell management? (Enter the variances as positive numbers. Enber the currency amounts in the formulas to the nearest cent, then round the firal variance amounts to the nearest whole dollar. Label the vaniance as favorable (F) or unfavorable (U Cakalb Begin by computing the variable manufacturing overhead rate variance. First detenmine the fomula for the rate variance, then compute the rate variance for variable manufacturing overhead Variable overhead rate varianoe Now compute the variable manufacturing overhead efidiency varliance. First detemine the fomula for the efficiency variance, then compute the efficiency variance for Vaniable overhead What do each of these variances tell management? Choose trom any list or eeter any number in the input felds and then continue to the next question 5 6 8 K.

Explanation / Answer

Requirement 1 Variable manufacturing Over head rate variance =(Actual hours * actual rate per hour) - (Actual hours * Standard rate per hour) Variable manufacturing Over head rate variance = (5000*$4.40) -(5000*$4.0)=$22000-$20000 =$2000 Unfavorable Varaible manufacturing Over head Efficiency Variance = (Actual hours *Standard rate ) -(Standard hours * standard rate per hour) Varaible manufacturing Over head Efficiency Variance = (5000*$4) - (2hrs*2000*$4) =$20000 -$16000 =$4000 Unfavorable What do each of these variance tell management variable over head rate and Efficeincy variabces are Unfavorable , these variances tell to management , Aquire more eficient Direct labour within budgeted cost Requirement 2 Fixed manufacturing over head Budget variance =Actual Fixed Over head cost - (Actua hours * Standard Over head rate) Fixed manufacturing over head Budget variance =$36600 - (5000*$10) =$36600 -$50000 =($13400) Favorable Fixed Manufacturing over head Volume varinace = (Actua hours * Standard Over head rate per hour) - (Standard Hours *Standard over head rate per hour) Fixed Manufacturing over head Volume varinace = (5000*$10) -(2*2000*$10) =$50,000 - $40,000 =$10000 Unfavorable What do each of these variance tell management Fixed manufacturing over head Budget variance is favorable that means it is effcient.

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