kk Sparty Gear, Inc. manufacturers canvas tents for tailgating. The company uses
ID: 2572620 • Letter: K
Question
kk Sparty Gear, Inc. manufacturers canvas tents for tailgating. The company uses a standard costing system and applies overhead on the basis of direct labor hours. Sparty Gear provides the following information about this product:
Calculate fixed manufacturing overhead (MOH) variances. Enter as a positive if favorable and negative if unfavorable.
a. Fixed overhead budget variance:
b. Fixed overhead volume variance:
Standards: Direct material 21.0 yards of canvas per tent at $12.00 per yard Direct labor 4.0 hours per tent at $12.00 per hour Variable manufacturing overhead (MOH) standard rate $4.60 per direct labor hour Predetermined fixed MOH standard rate $10.20 per direct labor hour Total budgeted fixed MOH cost $81,100Explanation / Answer
FOH budget variance Actual FOH Budgeted FOH Total variance F/U FOH budget variance = Actual FOH - Budgeted FOH FOH = Fixed overhead F= Favourable U = Unfavourable FOH budget variance Actual FOH Budgeted FOH Total variance F/U 79900 81100 1200 F FOH volume variance Budgeted FOH Applied FOH Total variance F/U FOH volume variance = Budgeted FOH - Applied FOH Applied FOH = Pre-determined overhead rate*Standard direct labor hours allowed for actual output Pre-determined overhead rate = $10.2 per direct labor hour Standard direct labor hours allowed for actual output = 2100*4 = 8400 Applied FOH = $10.2*8400 = $85680 FOH = Fixed overhead F= Favourable U = Unfavourable FOH volume variance Budgeted FOH Applied FOH Total variance F/U 81100 85680 -4580 U
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