Concept explainers
Calculating
Learning Objective 4
1, VOH Cost Var. $1,600 U
Mills, Inc, is a competitor of Murry, Inc, from Exercise E23-18 Mills also uses a
Static budget variable overhead | $1,200 |
Static budget fixed overhead | $ 1,600 |
Static budget direct labor hours | 800 hours |
Static budget number of units | 400 units |
Standard direct labor hours | 2 hours per unit |
Mills allocates manufacturing overhead to production based on standard direct labor hours. Mills reported the following actual results for 2018: actual number of units produced, 1,000; actual variable overhead, $4,000; actual fixed overhead, $3,100; actual direct labor hours, 1,600
Requirements
1. Compute the variable overhead cost and efficiency variances and fixed overhead cost and volume variances.
2. Explain why the variances are favorable or unfavorable.
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