E25-10 Manufacturing overhead data for the production of Product H by Norland Co
ID: 2443777 • Letter: E
Question
E25-10Manufacturing overhead data for the production of Product H by Norland Company are as follows.
Overhead incurred for 52,000 actual direct labor hours worked $213,000
Overhead rate (variable $3; fixed $1) at normal capacity of 54,000
direct labor hours $4
Standard hours allowed for work done 51,000
Instructions
Compute the total, controllable, and volume overhead variances.
Total overhead variance $ Favorable/Unfavorable
Overhead controllable variance $ UnfavorableFavorable
Overhead volume variance $ FavorableUnfavorable
I have no idea how to find the TVM,OCV, or OVV any help is appreciated
Explanation / Answer
Actuals: Overhead incured for direct labour = $213000 Used Direct Labour hours 52000 Overhead per direct labour hour = $4.096 (213000 / 52000) Standards: Standard direct labour hours 51000 Standard Variable overhead per labour hour = $3 Standard Variable overhead per labour hour = $1 Total standard cost per labour hour = $4 Standard Overhead for labour hours = $204000 (51000 * 4) Total Overhead Variance: Total Overhead Variance = (Standard Labour hours * Standard Cost) - Actual Cost = (51000 * 4) - 213000 = 204000 - 213000 = ($9000) Unfavorable Overhead Controlable Variance: Overhead Controlable Variance: Actual Overhead incured for Direct labour = $213000 Budgeted Expense: Standard Fixed Expense(52000*1) = $52000 Standard Variable Overheads(52000*3) = $156000 = $208000 Variance = $5000 Unfavorable Because we can control this $5000 costs Overhead Volume Variance: Standard Fixed Overheads(51000*1) = $51000 Standard Variable Overheads(51000*3) = $153000 Total standard overheads = $204000 Actuals: Actual Overheads (51000 * 4.096) = $208896 Variance = ($4896)Unfavorable Thank you... Actuals: Overhead incured for direct labour = $213000 Used Direct Labour hours 52000 Overhead per direct labour hour = $4.096 (213000 / 52000) Standards: Standard direct labour hours 51000 Standard Variable overhead per labour hour = $3 Standard Variable overhead per labour hour = $1 Total standard cost per labour hour = $4 Standard Overhead for labour hours = $204000 (51000 * 4)Related Questions
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