Calculating the Fixed Overhead Spending and Volume Variances Standish Company manufactures consumer products and provided the following information for the month of February: Units produced 131,000 Standard direct labor hours per unit 0.20 Standard fixed overhead rate (per direct labor hour) $2.50 Budgeted fixed overhead $65,000 Actual fixed overhead costs $68,300 Actual hours worked 26,350 Required: 1. Calculate the fixed overhead spending variance using the formula approach. $ Favorable Unfavorable 2. Calculate the volume variance using the formula approach. $ Favorable Unfavorable 3. What if 129,600 units had actually been produced in February? What impact would that have had? Indicate what the new variances would be below. Fixed Overhead Spending Variance $ Favorable Unfavorable Volume Variance $ Favorable Unfavorable
Calculating the Fixed Overhead Spending and Volume Variances Standish Company manufactures consumer products and provided the following information for the month of February: Units produced 131,000 Standard direct labor hours per unit 0.20 Standard fixed overhead rate (per direct labor hour) $2.50 Budgeted fixed overhead $65,000 Actual fixed overhead costs $68,300 Actual hours worked 26,350 Required: 1. Calculate the fixed overhead spending variance using the formula approach. $ Favorable Unfavorable 2. Calculate the volume variance using the formula approach. $ Favorable Unfavorable 3. What if 129,600 units had actually been produced in February? What impact would that have had? Indicate what the new variances would be below. Fixed Overhead Spending Variance $ Favorable Unfavorable Volume Variance $ Favorable Unfavorable
Principles of Cost Accounting
17th Edition
ISBN:9781305087408
Author:Edward J. Vanderbeck, Maria R. Mitchell
Publisher:Edward J. Vanderbeck, Maria R. Mitchell
Chapter8: Standard Cost Accounting—materials, Labor, And Factory Overhead
Section: Chapter Questions
Problem 17E: Calculating factory overhead: two variances Munoz Manufacturing Co. normally produces 10,000 units...
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Variance Analysis
In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.
Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
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