The following information for the period is available from the Magnum Company: A
ID: 2482248 • Letter: T
Question
The following information for the period is available from the Magnum Company:
Actual total factory overhead cost incurred
$25,000
Actual fixed overhead cost incurred
$10,400
Budgeted fixed overhead expenses
$11,000
Actual direct labor hours (DLH) worked
4,400
Standard DLHs for this period’s production
4,000
Standard variable overhead rate per DLH
$3.00
Standard fixed overhead rate per DLH
$2.50
Required: Calculate the following for Magnum Company for the period:
A. Total overhead spending variance
B. Variable overhead efficiency variance
C. Overhead production volume variance
D. Variable overhead (VOH) spending variance
E. Fixed overhead spending variance
F. Total under or over applied overhead
G. The total overhead flexible-budget (FB) variance for the period
Actual total factory overhead cost incurred
$25,000
Actual fixed overhead cost incurred
$10,400
Budgeted fixed overhead expenses
$11,000
Actual direct labor hours (DLH) worked
4,400
Standard DLHs for this period’s production
4,000
Standard variable overhead rate per DLH
$3.00
Standard fixed overhead rate per DLH
$2.50
Explanation / Answer
Hey Dear Student !!
1)
Total Overhead Spending Variance: Total Standard Overhead Cost- Total Actual Overhead Cost
Standard Overhead Cost: Std Variable Cost+ Std Fixed Cost
4000 X 3 + 2.50 X 4000= $22000
Actual Overhead Cost: $25000
TOS Variance: 22000-25000= -3000 (unfavourable)
2)
Variable Overhead Efficiency Variance:
(Standard Hours-Actual Hours) X Standard Overhead Rate
(4000-4400) X 3= -$1200 (unfavourable)
3)
Production Volume Variance: Can't be calculated because Number of units produced or budgeted not available where formula for this is as follows:
(Standard Production - Actual Production) X Standard Overhead Rate
4)
Variable Overhead Spending Variance: (Standard Variable Overhead Rate- Actual Variable Overhead Rate) Actual Hours Worked
Actual Variable Overhead Rate: Total Overhead-Fixed Overhead/ Total actual Hours
25000-10400/4400= $3.32
(3-3.32) X 4400= -$1400 (Unfavourable)
5)
Fixed Overhead Spending Variance:
Standard Fixed Overhead - Actual Fixed Overhead
11000-10400= $600 ( Favourable)
In case of Multiple Sub Parts we are supposed to answer first 4 only so you can post remaining questions as different question. I am sending you solution for 5 th part also in addition because data is not available for 3 rd part.
Pleasure Teaching you !!
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