Question

9. Markus Limited produces a specialised machine part used in forklifts. For last year's perations, the following data were gathered: Units produced: 55,000 Direct labour: 29,000 hours @ $9.00 Actual variable overhead: $135,000 Markus employs a standard costing system. During the year, a variable overhead rate of $5.00 was used. labour standard requires 0.50 hours per unit produced. The variable overhead spending and efficiency variances are, respectively: A. $10,000 U and $7,500 U B. $10,000 F and $7,500 U C. $7,500 U and $10,000 F D. $10,000 F and $7,500 F E. None of these 10. During the year, Hawker produced 10,000 units, used 20,000 direct labour hours, and incurred variable overhead of $90,000. Budgeted variable overhead for the year was $88,000. The hours allowed per unit are 2.1. The standard variable overhead rate is $4.00 per direct labour hour. The variable overhead spending variance is: A. $2,000 F B. $6,000 U $10,000 U $2,000 U E. None of these 11. Folson Pty Ltd is planning to produce 4,250,000 speakers for the coming year. Actual production was 4,000,000 speakers. Each speaker requires 0.80 direct labour hours per unit. Predetermined overhead rates are calculated using expected production, measured in direct labour hours. The budgeted variable overhead for the coming year is $680,000. The actual variable overhead incurred was $714,000. TH applied variable overhead for the year is: A. $800,000 B. $714,000 C. $640,000 D. $680,000 E. None of these

Answer 1

9.B.$10,000 F and $7500 U.

working:

variable overhead spending variance = (actual overhead) - (actual hours * standard rate)

=>$135,000 - (29,000 hours*$5)

=>$135,000 -145,000

=>$10,000 F..(since we actual overhead is lower).

variable overhead efficiency variance = (actual hours - standard hours) * standard rate.....(standard hours = 55,000 units*0.5)

=> (29,000 - 27,500) * $5

=>$7500 U...(unfavorable since we have more actual hours).

10.C.$10,000 U.

variable overhead spending variance = (actual overhead) - (actual hours * standard rate).

=>90,000 - (20,000*$4)

=>$10,000 U ....(unfavorable since we have higher actual overhead).

11.C.640,000.

overhead rate per direct labor hour = $680,000 / (4,250,000*0.8 per direct labor hours)

=>$680,000 / 3,400,000

=>$0.20 per direct labor hour.

applied variable overhead =4,000,000*0.80 *0.20

=>$640,000.