Overhead Variances, Two- And Three-Variance Analyses Oerstman, Inc., uses a standard costing system and develops its overhead rates from the current annual budget. The budget is based on an expected annual output of 121,500 units requiring 486,000 direct labor hours. (Practical capacity is 506,000 hours.) Annual budgeted overhead costs total $748,440, of which $544,320 is fixed overhead. A total of 119,200 units using 484,000 direct labor hours were produced during the year. Actual variable overhead costs for the year were $240,100, and actual fixed overhead costs were $555,300. Required: 1. Compute overhead variances using a two-variance analysis. Budget Variance $ Unfavorable Volume Variance $ Unfavorable 2. Compute overhead variances using a three-variance analysis. Spending Variance $ Unfavorable Efficiency Variance $ Unfavorable Volume Variance $ Unfavorable
Overhead Variances, Two- And Three-Variance Analyses Oerstman, Inc., uses a standard costing system and develops its overhead rates from the current annual budget. The budget is based on an expected annual output of 121,500 units requiring 486,000 direct labor hours. (Practical capacity is 506,000 hours.) Annual budgeted overhead costs total $748,440, of which $544,320 is fixed overhead. A total of 119,200 units using 484,000 direct labor hours were produced during the year. Actual variable overhead costs for the year were $240,100, and actual fixed overhead costs were $555,300. Required: 1. Compute overhead variances using a two-variance analysis. Budget Variance $ Unfavorable Volume Variance $ Unfavorable 2. Compute overhead variances using a three-variance analysis. Spending Variance $ Unfavorable Efficiency Variance $ Unfavorable Volume Variance $ Unfavorable
Managerial Accounting
15th Edition
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:Carl Warren, Ph.d. Cma William B. Tayler
Chapter9: Evaluating Variances From Standard Costs
Section: Chapter Questions
Problem 1PB: Direct materials and direct labor variance analysis Lenni Clothing Co. manufactures clothing in a...
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![Overhead Variances, Two- And Three-Variance Analyses
Oerstman, Inc., uses a standard costing system and develops its overhead rates from the current annual budget. The
budget is based on an expected annual output of 121,500 units requiring 486,000 direct labor hours. (Practical capacity is
506,000 hours.) Annual budgeted overhead costs total $748,440, of which $544,320 is fixed overhead. A total of 119,200
units using 484,000 direct labor hours were produced during the year. Actual variable overhead costs for the year were
$240,100, and actual fixed overhead costs were $555,300.
Required:
1. Compute overhead variances using a two-variance analysis.
Budget Variance
$
Unfavorable
Volume Variance
$
Unfavorable
2. Compute overhead variances using a three-variance analysis.
Spending Variance
$
Unfavorable
Efficiency Variance
$
Unfavorable
Volume Variance
$
Unfavorable](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F8107ce8c-0aeb-470d-b791-4898b6d4b334%2Fda99bb46-564a-4073-b9a3-0a4445b35d0c%2Fm67oone_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Overhead Variances, Two- And Three-Variance Analyses
Oerstman, Inc., uses a standard costing system and develops its overhead rates from the current annual budget. The
budget is based on an expected annual output of 121,500 units requiring 486,000 direct labor hours. (Practical capacity is
506,000 hours.) Annual budgeted overhead costs total $748,440, of which $544,320 is fixed overhead. A total of 119,200
units using 484,000 direct labor hours were produced during the year. Actual variable overhead costs for the year were
$240,100, and actual fixed overhead costs were $555,300.
Required:
1. Compute overhead variances using a two-variance analysis.
Budget Variance
$
Unfavorable
Volume Variance
$
Unfavorable
2. Compute overhead variances using a three-variance analysis.
Spending Variance
$
Unfavorable
Efficiency Variance
$
Unfavorable
Volume Variance
$
Unfavorable
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