2. Variances (10 marks)
Data
Output
Variable MO/H
Fixed MO/H
Budgeted
Actual
2,200
2,500
$8,300
$8,800
$8,000
$8,200
Standard hours allowed: 2 direct labor hours per unit
Actual hours used: 4,500 direct labor hours
The allocation base for both variable costs and fixed costs is direct labor hours.
Required:
a. Calculate the standard variable overhead rate
b. Calculate the variable overhead variances including spending variances, efficiency variance and flexible
variable overhead budget variance
c. Calculate the standard fixed overhead rate
d. Calculate the fixed overhead variances including spending variances, production volume variances and
fixed manufacturing overhead variances.