Variable Overhead Variances Assume that the best cost driver that Sony has for v

Question

Variable Overhead Variances Assume that the best cost driver that Sony has for variable factory overhead in the assembly department is machine hours. During April, the company budgeted 720,000 machine hours and $6,480,000 for its Texas plant's assembly department. The actual variable overhead incurred was $6,870,000, which was related to 750,000 machine hours. Do not round until your final answers. Round your answers to the nearest dollar. (a) Determine the variable overhead spending variance. OF (b) Determine the variable overhead efficiency variance. OF

Explanation / Answer

Answer = a) Standard Hours = 720000 Machiene Hours Standard Expenses = $           64,80,000 Standard Rate per hours = 9 Per machine Machiene Hours Actual Horus = 750000 Machiene Hours Actual Expenses = $           68,70,000 Actual rate per hours = 9.16 Per machine Machiene Hours Variable Overhead Spending Variance = (SR-AR) X Actual Machiene Hours Variable Overhead Spending Variance = ($ 9 - $ 9.16) X 750,000 Machiene Hours Variable Overhead Spending Variance = $ 0.16 X 750,000 Machiene Hours Variable Overhead Spending Variance = $             1,20,000 This is the excess expenses means the variance is = Unfavorable Answer = Variable ovehead Spending Variance = $120,000 Answer = Unfavorable Answer = B) Variable Overhead efficeiency Variance = Standard overhead rate x (Actual hours - Standard hours) Variable Overhead efficeiency Variance = $ 9 ( 750,000 machiene hours - 720,000 Maciene Hours) Variable Overhead efficeiency Variance = $ 9 X 30,000 machiene hours Variable Overhead efficeiency Variance = $ 270,000 There is excess machiene hours means the vriance is ungavorable Answer = Variable ovehead Efficiency Variance = $270,000 Answer = Unfavorable

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