Buis Corporation, which makes landing gears, has provided the following data for
ID: 2500035 • Letter: B
Question
Buis Corporation, which makes landing gears, has provided the following data for a recent month:
Determine the rate and efficiency variances for the variable overhead item supplies and indicate whether those variables are favorable or unfavorable. (Input all amounts as positive values. 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). Omit the "$" sign in your response.)
Budgeted production 1,700 gears Standard machine-hours per gear 5.2 machine-hours Budgeted supplies cost $5.80 per machine-hour Actual production 1,600 gears Actual machine-hours 8,800 machine-hours Actual supplies cost (total) $49,672Explanation / Answer
Variable overhead rate variance = (AH*AR) - (AH*SR)= $49,742 - (8,800 hours*$5.20 per hour)= $49,742 - $45,760 = $3,912 U
FSH = 1,700 units*5.8 hours per unit = 9,860 hours
Variable overhead efficiency variance = (AH - SH) SR= (8,800 hours - 9,860 hours)* $5.20 per hour = $5,512 F
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