Question

Chojnowski Incorporated makes a single product-a cooling coil used in commercial retngerators. The company has a standard cost system in which it applies overhead to this product based on the standard labor-hours allowed for the actual output of the period. Data concerning the most recent year appear below Budgeted (Planned) Overhead: Budgeted variable manufacturing overheadS 82,450 Budgeted fixed manufacturing overhead 325,975 25,000 units 20,000 units Budgeted production Actual production 1.70 DLH Standard Hours needed per Product Unit Actual variable manufacturing overhead Actual fixed manufacturing overhead Actual hours $ 74,812 312,975 31,700 labor-hours Using the table above as needed, answer the following four questions. 27. The variable overhead rate variance is: A) $14,280 F B) $13,314 U C) S14,280 U D) $13,314 F 28) The variable overhead efficiency variance is: A) $4,462 F B) $5,428 U C) $4,462 U D) $5,428 F 29) The fixed overhead budget variance is: A) $13,000 F B) $13,000 U C) $52,195 F D) $52,195 U 30) The fixed overhead volume variance is: A) $52,195 U B) $65,195 U C) $65,195 F D) $52,195 F

Answer 1

Solution 27:

Standard rate of variable overhead = $82,450 / (25000*1.70) = $1.94 per labor hour

Actual rate of variable overhead = $74,812 / 31700 = $2.36 per hour

Variable overhead rate variance = (SR - AR) * AH = ($1.94 - $2.36) * 31700 = $13,314 U

Hence option B is correct.

Solution 28:

Variable overhead efficiency variance = (SH - AH) * SR = (20000*1.70 - 31700) * $1.94 = $4,462 F

Hence option A is correct.

Solution 29:

Fixed overhead budget variance = Budgeted fixed overhead - Actual fixed overhead = $325,975 - $312,975 = $13,000 F

Hence option A is correct.

Solution 30:

Fixed overhead rate = Budgeted fixed overhead / Budgeted labor hours = $325,975/ (25000*1.70) = $7.67 per hour

Fixed overhead volume variance = Fixed overhead applied - Budgeted fixed overhead

= (20000*1.70*$7.67) - $325,975 = $65,195 U

Hence option B is correct,