Question

8 The following information relates to Brookman, Inc.'s overhead costs for (Click the icon to view the information) Requirements 1. Compute the overhead vanances for the month: variable overhead cost variance, variable overhead officiency variance, fixed ove 2. Explain why the variances are favorable or unfavorable. Requirement 1. Compute the overhead vanances for the month variable overhead cost variance, variable overhead efficiency varianc Begin by selecting the formulas needed to compute the variable overhead (VOH) and fixed overhead (FOH) variances, and then compu (Actual cost - Standard cost) Actual hours VOH cost variance (Actual hours - Standard hours allowed) x Standard cost - VOH efficiency variance Actual overhead. Budgeted overhead FOH cost variance Budgeted overhead - Allocated overhead FOH volume variance Enter any number in the edit fields and then click Check Answer

Answer 1

Variable overhead cost variance = (SR-AR) * AH SR = $7,000/1000 AR = $7 per hour =$10,300 / (7000*0.4) = $10,300/2800 = $ 3.678 AH = 7000*0.4 = 2800 hrs = ($7-$3.678)*2800 = 9,301.6 F Variable overhead efficiency variance = (SH-AH)* SR SH = 7200 * 0.25 = 1800 hrs AH = 2800 hrs SR = $7 per hour (1800-2800)*7 = 7000 U

Fixed overhead cost variance = Budgeted fixed overhead - Actual fixed overhead = 3000-2800 = 200F Fixed overhead volume variance = Fixed overhead applied - Budgeted fixed overhead = ($3000/1000hrs)*1800-3000 = $5400-$3000 = $2400F