World star Fender is a competitor of JMACS fender. JMACS Fender also uses a standard cost system and provide the following? information:
Static budget variable overhead
$3,500
Static budget fixed overhead
$28,000
Static budget direct labor hours
700
hours
Static budget number of units
28,000
units
Standard direct labor hours
0.025
hours per fender
Fender allocates manufacturing overhead to production based on standard direct labor hours. JMAC
Fender reported the following actual results for 2016 actual number of fenders? produced,20,000
actual variable? overhead, $4,960?; actual fixed? overhead $35,000, actual direct labor? hours, 410
Required
1.
Compute the overhead variances for the? year: variable overhead cost? variance, variable overhead efficiency? variance, fixed overhead cost? variance, and fixed overhead volume variance.
2.
Explain why the variances are favorable or unfavorable.
World star Fender is a competitor of JMACS fender. JMACS Fender also uses a standard cost system and provide the following? information:
| Static budget variable overhead | $3,500 | |
| Static budget fixed overhead | $28,000 | |
| Static budget direct labor hours | 700 | hours |
| Static budget number of units | 28,000 | units |
| Standard direct labor hours | 0.025 | hours per fender |
Fender allocates manufacturing overhead to production based on standard direct labor hours. JMAC
Fender reported the following actual results for 2016 actual number of fenders? produced,20,000
actual variable? overhead, $4,960?; actual fixed? overhead $35,000, actual direct labor? hours, 410
Required
| 1. | Compute the overhead variances for the? year: variable overhead cost? variance, variable overhead efficiency? variance, fixed overhead cost? variance, and fixed overhead volume variance. |
| 2. | Explain why the variances are favorable or unfavorable. |
Related questions
Overhead Variances, Four-Variance Analysis
Oerstman, Inc., uses a standard costing system and develops itsoverhead rates from the current annual budget. The budget is basedon an expected annual output of 128,000 units requiring 512,000direct labor hours. (Practical capacity is 532,000 hours.) Annualbudgeted overhead costs total $844,800, of which $604,160 is fixedoverhead. A total of 119,500 units using 510,000 direct labor hourswere produced during the year. Actual variable overhead costs forthe year were $262,000, and actual fixed overhead costs were$555,550.
Required:
1. Compute the fixed overhead spending andvolume variances.
| Fixed Overhead Spending Variance | $ | |
| Fixed Overhead Volume Variance | $ |
2. Compute the variable overhead spending andefficiency variances. Do not round intermediate calculations
| Variable Overhead Spending Variance | $ | |
| Variable Overhead Efficiency Variance | $ |
Exercise 9.16
Overhead Variances, Two- And Three-Variance Analyses
Oerstman, Inc., uses a standard costing system and develops itsoverhead rates from the current annual budget. The budget is basedon an expected annual output of 120,000 units requiring 480,000direct labor hours. (Practical capacity is 500,000 hours.) Annualbudgeted overhead costs total $787,200, of which $556,800 is fixedoverhead. A total of 119,400 units using 478,000 direct labor hourswere produced during the year. Actual variable overhead costs forthe year were $230,600, and actual fixed overhead costs were$556,250.
Required:
1. Compute overhead variances using atwo-variance analysis.
| Budget Variance | $_____ | Favorable or Unfavorable |
| Volume Variance | $_____ | Favorable or Unfavorable |
2. Compute overhead variances using athree-variance analysis.
| Spending Variance | $____ | Favorable or Unfavorable |
| Efficiency Variance | $____ | Favorable or Unfavorable |
| Volume Variance | $____ | Favorable or Unfavorable |
