The following data pertains to the month of October for ElmCo. when production was budgeted to be 5,000 units of P90. P90 has standard costs per unit of: 3 Ibs. of Direct Materials at a cost of $7.00 per Ib.; 0.20 hours of Direct Labor at $18.00 per hour; and Variable Overhead assigned on the basis of 0.05 machine hours at a rate of $50 per machine hour. In October the production of P90 totaled 4,600 units, using 324 machine hours costing a total of $17,066. Determine the variable overhead spending variance. (Negative numbers indicate a favorable variance.)
The following data pertains to the month of October for ElmCo. when production was budgeted to be 5,000 units of P90. P90 has standard costs per unit of: 3 Ibs. of Direct Materials at a cost of $7.00 per Ib.; 0.20 hours of Direct Labor at $18.00 per hour; and Variable Overhead assigned on the basis of 0.05 machine hours at a rate of $50 per machine hour. In October the production of P90 totaled 4,600 units, using 324 machine hours costing a total of $17,066. Determine the variable overhead spending variance. (Negative numbers indicate a favorable variance.)
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 17P: Shinto Corp. uses a standard cost system and manufactures one product. The variable costs per...
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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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Transcribed Image Text:The following data pertains to the month of October for ElmCo. when production was budgeted to be 5,000
units of P90. P90 has standard costs per unit of: 3 Ibs. of Direct Materials at a cost of $7.00 per Ib.; 0.20 hours
of Direct Labor at $18.00 per hour; and Variable Overhead assigned on the basis of 0.05 machine hours at a
rate of $50 per machine hour. In October the production of P90 totaled 4,600 units, using 324 machine hours
costing a total of $17,066. Determine the variable overhead spending variance. (Negative numbers indicate a
favorable variance.)
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