Kris Company calculates its predetermined rates using practical volume, which is
ID: 2636839 • Letter: K
Question
Kris Company calculates its predetermined rates using practical volume, which is 325,000 units. The standard cost system allows 3 direct labor hours per unit produced. Overhead is applied using direct labor hours. The total budgeted overhead is $4,260,000, of which $994,000 is fixed overhead. The actual results for the year are as follows:
318,000
3,302,000
998,000
Refer to Figure 11-4. Calculate the variable overhead spending variance.
318,000
Direct labor: 965,000 hours @ 12/hour Variable overhead:3,302,000
Fixed overhead:998,000
Explanation / Answer
Units Produced 325000 Actula Units produced 318000 Budgeted per unit Variable Overhead=(4260000-994000)/325000 10.05 Actual Variable Overhead per unit=3302000/318000 10.38 Variable Overhead spending varainec=((10.38-10.05)/10.05)*100 3.28
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