Concept explainers
Concept introduction:
Variable overhead rate variances:
It is a measure to determine the impact of the difference between standard variable overhead rate,i.e., the rate that should be paid and actual variable overhead rate,i.e., the rate which is actually paid for actual hours on the standard variable overhead.
Variable overhead efficiency variances:
It isa measure to determine the impact of the difference between standard number of hours worked and actual hours worked on the standard variable overhead.
Variable overhead spending variances:
It is the combined value of the variable overhead rate variance and variable overhead efficiency variance.
Actual variable overhead:
It is the overhead which is actually incurred and is calculated by multiplying actual hourwith actual rate.
Applied variable overhead:
It is the overhead which should be incurred and is calculated by multiplying standard hour with standard rate.
To compute:
The variable overhead rate and efficiency variances and its over or under applied variable overhead.
Want to see the full answer?
Check out a sample textbook solutionChapter 9 Solutions
Managerial Accounting
- The variable overhead rate variance is caused by the sum between which of the following? A. actual and standard allocation base B. actual and standard overhead rates C. actual and budgeted units D. actual units and actual overhead ratesarrow_forwardVariable Overhead Spending and Efficiency Variances, Columnar and Formula Approaches Rath Company provided the following information: Required: 1. Using the columnar approach, calculate the variable overhead spending and efficiency variances. 2. Using the formula approach, calculate the variable overhead spending variance. 3. Using the formula approach, calculate the variable overhead efficiency variance. 4. Calculate the total variable overhead variance.arrow_forwardFixed Overhead Spending and Volume Variances, Columnar and Formula Approaches Branch Company provided the following information: Required: 1. Using the columnar approach, calculate the fixed overhead spending and volume variances. 2. Using the formula approach, calculate the fixed overhead spending variance. 3. Using the formula approach, calculate the fixed overhead volume variance. 4. Calculate the total fixed overhead variance.arrow_forward
- Variable Overhead Spending and Efficiency Variances, Columnar and Formula Approaches Aretha Company provided the following information: Required: 1. Using the columnar approach, calculate the variable overhead spending and efficiency variances. 2. Using the formula approach, calculate the variable overhead spending variance. 3. Using the formula approach, calculate the variable overhead efficiency variance. 4. Calculate the total variable overhead variance.arrow_forwardCompute for variable overhead efficiency variance.arrow_forwardBased on the attached image: a. Using the four-variance approach, what is the fixed overhead spending variance? b. Using the four-variance approach, what is the variable overhead efficiency variance?arrow_forward
- Deluxe, Inc. produced 1,000 units of the company's product in 2018. The standard quantity of direct materials was three yards of cloth per unit at a standard cost of $1.05 per yard. The accounting records showed that 2,600 yards of cloth were used and the company paid $1.10 per yard. Standard time was two direct labor hours per unit at a standard rate of $10.75 per direct labor hour. Employees worked 1,400 hours and were paid $10.25 per hour. Read the requirements. Requirement 1. What are the benefits of setting cost standards? Standard costing helps managers do the following: Requirement 2. Calculate the direct materials cost variance and the direct materials efficiency variance as well as the direct labor cost and efficiency variances. Begin with the cost variances. Select the required formulas, compute the cost variances for direct materials and direct labor, and identify whether each variance is favorable (F) or unfavorable (U). (Abbreviations used: AC actual cost; AQ = actual…arrow_forwardRequired:Calculate the overhead variance and explain why it is favorable or unfavorablearrow_forwardDefine variable overhead cost variance.arrow_forward
- To calculate variable overhead spending variance, efficiency variance and total variable overhead variance.arrow_forwardI need the answer to price variance and efficieny overhead total variance for Variable Overheadarrow_forwardPlease help answer: fixed overhead spending variance for Nov. And variable overhead spending variance for Nov.arrow_forward
- Principles of Accounting Volume 2AccountingISBN:9781947172609Author:OpenStaxPublisher:OpenStax CollegeManagerial Accounting: The Cornerstone of Busines...AccountingISBN:9781337115773Author:Maryanne M. Mowen, Don R. Hansen, Dan L. HeitgerPublisher:Cengage Learning