Crystal Glassware Company has the following standards and flexible-budget data.

Question

Crystal Glassware Company has the following standards and flexible-budget data. Standard variable-overhead rate Standard quantity of direct labor Budgeted fixed overhead Budgeted output $ 7.00 per direct-labor hour 3 hours per unit of output $132,000 22,000 units Actual results for April are as follow:s Actual output Actual variable overhead Actual fixed overhead Actual direct labor 15,000 units $405,000 $126,000 52,000 hours Required Use the variance formulas to compute the following variances. (Indicate the effect of each variance by selecting "Favorable" or "unfavorable". Select "None" and enter "0" for no effect (i.e., zero variance).) 1. |Variable-overhead spending variance 2. Variable-overhead efficiency variance 3. Fixed-overhead budget variance 4. Fixed-overhead volume variance

Explanation / Answer

Answer for 1)

Variable Overhead spending variance:

(Std.variable overhead rate-actual overhead variable rate)actual hours

=($7-$405000/52000hours)×52000 hours

=$41000unfavorable

Answer for 2)

Variable overhead efficiency variance:

(Std. Hours -Actual hours)STD. Rate

=(15000 units×3hours-52000hours)$7

=$49000 unfavorable

Answer for 3)

Fixed overhead budget variance

Budgeted fixed overhead-actual fixed over head

=$132000-$126000=$6000 favourable

Answer for 4)

Fixed over head volume variance:

(Budgeted volume -actual volume)×std.rate

(22000 units-15000 units)×$132000/22000 units

7000 units×$6=$42000 unfavorable.

Note:budgeted volume variance is unfavorable if less volume is produced than actual.

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