Labour and Variable Manufacturing Overhead Variances [L05,L06] Hollowell Audio I

Question

Labour and Variable Manufacturing Overhead Variances [L05,L06] Hollowell Audio Inc, manufactures military-specifications compact discs The company uses standards to control its costs. The labor standards that have been set for one disc are as follows. During July, 9.360 hours of direct labor time were required to make 19,600 discs. The direct labor cost totaled $54,288 for the month. According to the standards, what direct labor cost should have been incurred to make the 19,600 discs? (Do not round intermediate calculations.) By how much does this differ the cost that was incurred? (Input the amount as a positive value. Do not round intermediate calculations. Leave no cells blank - be certain to enter "0" wherever required. Indicate the effect of each variance by selecting "F" for favorable, "u" for unfavorable, and "None" for no effect (i.e., zero variance).) Spending variance Break down the difference in cost from (1) above into a labor efficiency variances and a labor rate variance. (Input all amounts as positive values. Do not round intermediate calculations. Leave no cells blank - be certain to enter "0" wherever required .Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect Labor efficiency variances Labor rate variance The budgeted variable manufacturing overhead rate is $4.30 per direct labor-hour. During July, the company incurred $48,672 in variable manufacturing overhead cost. Compute the variable overhead efficiency and rate variances for the month. (Input all amounts as positive values. Do not round intermediate calculations. Round your final answers to the nearest dollar amount. Leave no cells blank - be certain to enter "0" wherever required. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance).) Variable overhead efficiency variance Variable overhead rate variance

Explanation / Answer

Hi,

Please find the answer as follows:

Variable Overhead Efficiency Variance = 9360*4.3 - 8820*4.3 = 2322 (U)

Variable Overhead Rate Variance = 9360*4.3 - 48672 = 8424 (U)

Thanks.

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