Search E9-9 Calculating Fixed Manufacturing Overhead Spending. Volume Variances

Question

Search E9-9 Calculating Fixed Manufacturing Overhead Spending. Volume Variances [LO 9-S1] Parker Plastic, Inc., manufactures plastic mats to use with roling office chairs. Its standard cost information for last year follows Direct materials (plastic) Direct labor Variable manufacturing overhead (based on4 he Quantty Standard Price 12 s 0.67 per sq. t 04 hr $ 10.30 per hr $ 0.80 per r s 804 4.12 0.32 direct labor hours) Fixed manufacturing ovechead $460.000- 0.50 920,000 units) Parker Plastic had the following actual results for the past year 1020,000 11,730,000 7,624,500 403,000 3,989,700 $ 362,700 444,000 Number of units produced aold Number of square feet of plastic used Cost of plastic purchased and used Number of labor hours worked Variable overhead cost Fixed overhead cost Required: Calculate Parker Plastics fixed overhead spending and volume variances and its over-or underappled food ovorhead. ardeate the effect of each variance by selecting-F- for favorable/Overapplied and "U" for unfavorablelunderapplied.) Fixed Overhead Spending Variance Fixed Overhoad Volume Variance or Underapplied Fxed Overhead P/8 PrtSen End 8 2 8 0

Explanation / Answer

Fixed Overhead Spending Variance = Actual fixed overhead cost - Budgeted fixed overhead cost = $444000 - $460000 = $16000 F

Fixed Overhead Volume Variance = Fixed overheads applied - Budgeted fixed overhead = ($0.50 x 1020000) - $460000 = $510000 - $460000 = $50000 F

Fixed Overhead Spending Variance $       16,000 F Fixed Overhead Volume Variance $       50,000 F Over- or Underapplied Fixed Overhead $       50,000 F

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