Druid Company makes a single product and uses a standard costing system that app

Question

Druid Company makes a single product and uses a standard costing system that applies overhead on the basis of direct labor hours. They recently used 2,000labor hours to produce 300 units. Their static budget indicated expectations of 500 units, 2,000 DLH and $60,000 in variable overhead. Actual VOH totaled $40,000.

What was the variable overhead spending variance?

What was the variable overhead efficiency variance?

Please indicate favorable variances with an "f" and unfavorable variances with a "u"

Aggregate demand for a product family is given in the table below for the four quarters of 2007. Production cost on regular time is $7 per unit. Labor fluctuation costs are accounted for by costs of changes in production level: each unit of increase in production is accounted for at $1 per unit of increase and $2 per unit of decrease. The inventory cost is $1 per unit per quarter. When necessary, up to 800 units can be subcontracted at a cost of $8 per unit. Demand that cannot be met is a lost sale and accounted for at $10 per unit. Production Production Subcontracted Lost Sale Quarter Demand Production Inventory Increase Decrease Units Q4 06 Q1 07 Q2 07 Q3 07 Q4 07 300 900 200 300 700 The aggregate planning technique being considered is level production. That is, the production level is the same for each quarter. Compute the total annual cost of meeting demand for 2007. (Determine the number of units to produce in each month (sum of demand minus initial inventory, divided by four). Then for each month, compute the changes in productive level, the number of units to be subcontracted, ending inventory, and the lost sales) Answer:

Explanation / Answer

Variable overhead spending variance =40000-(2000*30)= 20000 F Variable overhead efficiency variance = 30*(2000-300*4)= 24000 U

Related Questions

Navigate

• Browse (All)
• Browse D
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.