cost system and has the following information regarding the labor and overhead u
ID: 2403342 • Letter: C
Question
cost system and has the following information regarding the labor and overhead used in the production of widgets. Standard tabor input is 2 00 hours per unt The vanable overhead rate is $8.3 per hour, fixed overhead is budgeted to be $1.00,200 on budgeted production of 7,940 widgets During August, Benjamin Inc paid as workers $160,100 for 16,800 hours Actual variable averhead incurred totaled $138,530, actual foxed overhead totaled $91,456 Benjamin Inc produced 8600 widgets during August a. Calculate the variable overhead tate variance. (Do not round your intermediate calculations. Indicate the effect of variance by selecting "Favorable", "Unfavorable", or "None for no effect (i.e, zero variance)) b. Calculate the variable overhead efficiency variance answer to nearest whole dollar amount Indicate-the effeet of vañance by selecting "Favorable, "Unfavorable, or "None" for no effeet fi.e, zero variance), Round your . Caculate the fixed overhoad spending variance (Indicate the offect of varance by selecting"Favorable Unfavorable or "None" for no offest (ie, zero varianoe))Explanation / Answer
BENJAMIN INC.
Standard labour input. = 2 Hours per unit
Variable overhead rate. = $ 8.3 per hour
Fixed overhead ( Budgeted ) = $ 1,00,200
( For budgeted production of 7940 widgets )
Actual output = 8,600 widgets
Details for actual output of 8,600 widgets :
Standard hours = output*Hours per unit
= 8600 U * 2 Hrs
= 17,200 Hours
Standard rate per hour ( Variable o/h ) = $ 8.3 Phr
Actual hours = 16,800 hours
Actual rate per hour = 1,38,530 / 16,800 Hrs
= 8.246 (approximately)
( A ) Variable overhead Rate Variance :
v o/h r v = Actual hours ( Standard Rate - Actual Rate )
= 16,800 ( 8.3 per hr - (1,38,530/16800))
= 910 ( Favourble )
(B) Variable overhead efficiency Variance :
v o/h e v = Standard rate ( standard hours - Actual Hours )
= 8.3 ( 8600*2 - 16,800 )
= 8.3 (400)
= 3,320 ( Favourble )
(C) Fixed overhead Spending Variance :
F O/h S V = Budgeted Fixed Overheads - Actual Fixed overheads
= 1,00,200 - 91,456
= 8744 ( Favourble )
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