pany manufactures pillows. machine-hour The 2015 operating budget is based on pr
ID: 2577145 • Letter: P
Question
pany manufactures pillows. machine-hour The 2015 operating budget is based on production of 25,000 3) Comfort Com pillows with 0.75 Actual production for 2015 was 27,000 allowed per pillow. Budgeted variable overhead per hour was $25 pillows using 19,050 machine-hours. Actual variable costs 19,0s0 Required: Calculate the variable overhead spending and efficiency variances. 10 points 4) Aspen Manufacturing Company sells its products for $33 each. The current production level is 50,000 units, although only 40,000 units are anticipated to be sold. Unit manufacturing costs are: Pepper Cost Accounting Fall 2017Explanation / Answer
Answer:- Standard cost = Standard rate hour*standard hour per unit*Actual units
=$25 per hour *0.75 standard machine hours per pillow*27000 pillows
= $506250
Actual cost = 19050 machine hours * $23 per machine hour
=$438150
Variable overhead efficiency variance = (Standard rate – Actual rate) * Actual hours
= ($25 per hour - $23 perhours)* 19050 machine hours
= $38100 Favourable
Variable overhead spending variance=(Standard hours-Actual hours)*Standard rate per hour
=(20250 hours – 19050 hours)*$25 per hour
= $30000 Favourable
Where:-
Standard hours = Standard hours per unit*Actual units
=.75 standard machine hours per unit*27000 pillows
= 20250 hours
Variable overhead cost variance = Standard cost – Actual cost
= $506250-$438150 = $68100 Favourable
Variable overhead cost variance = Spending varaiance + Efficiency varaiance
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