Overhead Variances You may use the attached spreadsheet to help you complete thi
ID: 2370199 • Letter: O
Question
Overhead Variances
You may use the attached spreadsheet to help you complete this activity, but you are not required to do so. You will find the spreadsheet by clicking on the link in the drop-down menu above.
Gaillard computes its overhead rates using practical volume, which is 144,000 units. The actual results for the year are as follows:
1. Compute the variable overhead spending and efficiency variances.
2. Compute the fixed overhead spending and volume variances.
Spending variance $ SelectFavorableUnfavorableNo varianceItem 2 Efficiency variance $ SelectFavorableUnfavorableNo varianceItem 4Explanation / Answer
Variable Overhead Spending Variance Variable Overhead spending variance (also called variable overhead rate variance) is the product of actual units of the allocation base of variable overhead and the difference between standard variable overhead rate and actual variable overhead rate. The formula to calculate the variable overhead spending variance is: VOH Spending Variance = ( SR ? AR )
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