Question

Variable Overhead Spending and Efficiency Variances, Columnar and Formula Approaches Aretha Company provided the following information: Standard variable overhead rate (SVOR) per direct labor hour $4.70 Actual variable overhead costs $335,750 Actual direct labor hours worked (AH) 69,200 Actual production in units 14,000 70,000 Standard hours (SH) allowed for actual units produced Required: 1. Using the columnar approach, calculate the variable overhead spending and efficiency variances. Enter amounts as positive numbers and select Favorable (F) or Unfavorable (U). (1) AH X SVOR SH X SVOR Spending Efficiency Efficiency variance 2. Using the formula approach, calculate the variable overhead spending variance. Enter amount as a positive number and select Favorable or Unfavorable. 3. Using the formula approach, calculate the variable overhead efficiency variance. Enter amount as a positive number and select Favorable or Unfavorable. 4. Calculate the total variable overhead variance. Enter amount as a positive number and select Favorable or Unfavorable.

Answer 1

1.

AH * AR	AH* SR	SH * SR
69200*4.85	69200 * 4.7	70000*4.7
$                                                         335,620.00	$                                                                                                                            325,240.00	$ 329,000.00
$                                                           10,380.00		$      3,760.00
UNFAVORABLE		FAVORABLE
Variable overhead spending variance		Variable overhead efficiency variance

....

VARIANCE - Microsoft Excel - 0 X Page Layout Formulas Data Review View Home Insert % Cut Ea Copy Format Painter Clipboard Calibri BI U - 11 - A À --A = = = . = Wrap Text General F D Autosum A7 A Paste Merge & Center - $ - % , , Insert Delete Format Conditional Format Formatting as Table Styles Cell Styles 2 Clear Sort & Find & Filter Select Editing Font Alignment Number Cells D27 G H I J K L M Variable Overhead Spending variance = (Actual Rate * Actual Hour - Standard Rate * Actual Hour) = AH (AR-SR) AR = 335750/69200 = $4.85 4.851878613 AH = Actual hours worked during the period = 69,200 SR = Standard variable manufacturing overhead rate = $4.70 Variable overhead spending variance = 69200 (4.85 - 4.70) 10,380.00 FAVORABLE unfavorable AH * AR 69200*4.85 AH* SR 69200 * 4.7 $ SH * SR 70000*4.7 $329,000.00 30 Standard Rate) 335,620.00 325,240.00 31 32 10,380.00 UNFAVORABLE Variable overhead spending variance $ 3,760.00 FAVORABLE Variable overhead efficiency variance Activate Windows Galto Settings to activate Windows 39 + Ready Sheet1 Sheet2 Sheet3 Average: 200800 Count: 15 Sum: 1004000 B O 6 100% - 12:13 PM ENG - 28-Oct-19 що е ве орын Type here to search 0

2.

Variable overhead efficiency variance = SR × (AH – SH)
SR = Standard variable manufacturing overhead rate = $4.70
AH = Actual hours worked during the period = 69,200
SH = Standard hours allowed for actual output or production = 70,000
Variable overhead efficiency variance = SR × (AH – SH) = 4.70 (69,200 -70000)
= 4.70* 800
$                                                                                                                                              3,760.00	FAVORABLE

3.

Variable Overhead Spending variance = (Actual Rate * Actual Hour - Standard Rate * Actual Hour ) = AH (AR - SR)
AR = 335750/69200 = $ 4.85	4.851878613
AH = Actual hours worked during the period = 69,200
SR = Standard variable manufacturing overhead rate = $4.70
Variable overhead spending variance =	69200 ( 4.85 - 4.70)
	$                                                                                                                              10,380.00
	unfavorable

4.

Total Variable Overhead variance = (Actual Hour * Actual Rate - Standard Hour * Standard Rate)

AH = Actual hours worked during the period = 69,200

SH = Standard hours allowed for actual output or production = 70,000

AR = 335750/69200 = $ 4.85

SR = Standard variable manufacturing overhead rate = $4.70

Total Variable Overhead variance = (69200*4.85) - (70000*4.7)

$                                                                                                                                              6,620.00

unfavorable