Zepol Company is planning to produce 600,000 power drills for the coming year. The company uses direct labor hours to assign overhead to products. Each drill requires 0.75 standard hour of labor for completion. The total budgeted overhead was $1,777,500. The total fixed overhead budgeted for the coming year is $832,500. Predetermined overhead rates are calculated using expected production, measured in direct labor hours. Actual results for the year are: Actual production (units) 594,000 Actual variable overhead $928,000 Actual direct labor hours (AH) 446,000 Actual fixed overhead $835,600 Required: 1. Compute the variable overhead spending and efficiency variances. Enter amounts as positive numbers and select Favorable or Unfavorable. Spending variance $fill in the blank 7 Favorable Efficiency variance $fill in the blank 9 Unfavorable 2. Compute the applied fixed overhead. $fill in the blank 1 3. Compute the fixed overhead spending and volume variances. Enter amounts as positive numbers and select Favorable or Unfavorable. Spending variance $fill in the blank 2 Unfavorable Volume variance $fill in the blank 4 Unfavorable
Master Budget
A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.
Sales Budget and Selling
A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.
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Zepol Company is planning to produce 600,000 power drills for the coming year. The company uses direct labor hours to assign
| Actual production (units) | 594,000 | Actual variable overhead | $928,000 | |||
| Actual direct labor hours (AH) | 446,000 | Actual fixed overhead | $835,600 |
Required:
1. Compute the variable overhead spending and efficiency variances. Enter amounts as positive numbers and select Favorable or Unfavorable.
| Spending variance | $fill in the blank 7 | Favorable | |
| Efficiency variance | $fill in the blank 9 | Unfavorable |
2. Compute the applied fixed overhead.
$fill in the blank 1
3. Compute the fixed overhead spending and volume variances. Enter amounts as positive numbers and select Favorable or Unfavorable.
| Spending variance | $fill in the blank 2 | Unfavorable | |
| Volume variance | $fill in the blank 4 | Unfavorable |
4. Compute the applied variable overhead.
$fill in the blank 6
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