Variable Overhead Variances Morgan Tax Company considers 6,000 direct labor hour
ID: 2569780 • Letter: V
Question
Variable Overhead Variances
Morgan Tax Company considers 6,000 direct labor hours or 300 tax returns its normal monthly capacity. Its standard variable overhead rate is $9 per direct labor hour. During the current month, $45,400 of variable overhead cost was incurred in working 5,600 direct labor hours to prepare 270 tax returns. Determine the following variances, and indicate whether each is favorable or unfavorable:
Determine the following variances:
Do not use negative signs with any of your answers. Next to each variance answer, select either "F" for Favorable or "U" for Unfavorable.
Variable Overhead Variances Actual cost: $Answer Split cost: $Answer Standard cost: $Answer a. Variable overhead spending $Answer AnswerFU b. Variable overhead efficiency $Answer AnswerFUExplanation / Answer
Actual Cost 45400 Split cost (5600*9) 50400 Standard cost (5400*9) 48600 a) Variable overhead spending variance ( Standard cost for actual output -Actual cost) 50400-45400 (5600*9-45400) -5000 favorable b) variable overehad efficiency variance (Standard hours-actual hours)*standard rate Split cost - standard cost (50400-48600) 1800 unfavorable * standard hours (6000/300*270) 5400
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