hapter 11 Starlight Glassware Company has the following standards and flexible-b

Question

hapter 11 Starlight Glassware Company has the following standards and flexible-budget data. Standard variable-overhead s 700 rate hour Standard quantity of direct 2 hours per unit of labor output $132.000 Budgeted fixed overhead Budgeted output 22,000 units Actual results for February are as follows: Actual output 15,000 units Actual variable $405,00 overhead Actual fixed overhead Actual direct labor $ 126.000 52.000 hours Required: Use the variance formulas to compute the following variances. (Indicate the effect of h variance by selecting "Favorable" or "Unfavorable". Select "None" and enter "O" for no effect (i.e., zero variance).) Variable-overhead spending vanance 2. Vanable-overhead efficiency variance 3. Fixed overhoad budget variance 4. Fixed-overhead volume variance

Explanation / Answer

1 Explanation: Variable-overhead spending variance = actual variable overhead – (AH × SVR) 405000-(52000*7) 41000U 2 Variable-overhead efficiency variance = SVR(AH – SH) 8*(54000-45000) 72000U **15000*3=45000 3 Fixed-overhead budget variance = actual fixed overhead – budgeted fixed overhead 126000-132000 - 6000 F 4 Fixed-overhead volume variance = budgeted fixed overhead – applied fixed overhead 132000-90000 42000 U **Applied fixed overhead 15000*3*2 = 90000 132000/(22000*3) = 2 Variable-overhead spending variance 41000U   Variable-overhead efficiency variance 72000U   Fixed-overhead budget variance - 6000 F   Fixed-overhead volume variance 42000 U

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