Exercise 23-27 Computing total variable and fixed overhead variances P5
Sedona Company set the following standard costs for one unit of its product for this year.
Direct material (20 lbs. $2.50 per lb.)........... $ 50 Direct labor (10 hrs. $22.00 per DLH)...... 220 Variable overhead(10 hrs.@$4.00 per DLH)..... 40 Fixed overhead (10 hrs. @ $1.60 per DLH) 16 Standard cost per unit .. $326
The $5.60 ($4.00 + $1.60) total overhead rate per direct labor hour (DLH) is based on a predicted activity level of 37,500 units, which is 75% of the factory's capacity of 50,000 units per month. The following monthly flexible budget information is available.
Flexible Budget 70% 75% 80% Budgeted production is... 35,000 37,500 40,000 Budgeted direct labor (standard hours) 350,000 375,000 400,000 Budgeted overhead Variable overhead $1,400,000 $1,500,000 $1,600,000 Fixed overhead 600,000 600,000 600,000 Total overhead . - - $2,000,000 $2,100,000 $2,200,000
During the current month, the company operated at 70% of capacity, direct labor of 340,000 hours were used, and the following actual overhead costs were incurred.
Actual variable overhead . - - $1,375,000 Actual fixed overhead..... 628,600 Actual total overhead...- $2,003,609
. Compute the total variable overhead variance, and identify it as favorable or unfavorable. 2. Compute the total fixed overhead variance, and identify it as favorable or unfavorable.
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FINAL PAGES
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Chapter 23 Flexible Budgets and Standard Costs
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Refer to the information from Exercise 23-27. Compute the following. . Variable overhead spending and efficiency variances. . Fixed overhead spending and volume variances. 3. Controllable variance.
Exercise 23-28^ Detailed overhead variances_P5 Check (1) Variable overhead: Spending, $15,000 U
