Jake's cheese Company produces gourmet cheese for resale at local grocery stores. Jake's expected to use 0.50 direct labor hours to produce one unit (batch) of product, and the variable overhead rate is $5.00 per hour. Actual results are in for last year, which indicates 45,000 batches of cheese were produced and sold. The company's direct labor workforce worked 27,500 hours, and variable overhead costs totaled $144,000. Required: (1) Calculate the variable overhead spending variance. (2) Calculate the variable overhead efficiency variance. (3) Suggest several possible reasons for the variable overhead spending and efficiency variances.

Jake's cheese Company produces gourmet cheese for resale at local grocery stores. Jake's expected to use 0.50 direct labor hours to produce one unit (batch) of product, and the variable overhead rate is $5.00 per hour. Actual results are in for last year, which indicates 45,000 batches of cheese were produced and sold. The company's direct labor workforce worked 27,500 hours, and variable overhead costs totaled $144,000. Required: (1) Calculate the variable overhead spending variance. (2) Calculate the variable overhead efficiency variance. (3) Suggest several possible reasons for the variable overhead spending and efficiency variances.

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Description: Problem #11: Standard Costing & VariancesJake's cheese Company produces gourmet cheese for resale at local grocery stores. Jake's expected to use 0.50 direct laborhours to produce one unit (batch) of product, and the variable overhead rate is $5.00

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter8: Standard Costs And Variances

Section: Chapter Questions

Problem 11EB: Fitzgerald Company manufactures sewing machines, and they produced 2,500 this past month. The...

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