Question

Required information Use the following information for the Exercises below. The following information applies to the questions displayed below) rice by selecting for vorable Compute the fed overhead spending and volume variances and classy each farble or dvorableIndicate the effect of each unfavorable and now Round te per un to 2 decimal places) Acad On cost Feed Of Buited Standard Cont rol Sedona Company set the following standard costs for one unit of its product for this year. Direct material (20 lbs. $3.30 per Ib.) Direct labor (15 hrs. $6.00 per hr.) Variable overhead (15 hrs. $2.80 per hr.) Fixed overhead (15 hrs. $1.20 per hr.) Total standard cost 18.00 The $4.00 (52.80 +$120) total overhead rate per direct labor hour is based on an expected operating level equal to 75% of the factory's capacity of 58,000 units per month. The following monthly flexible budget information is also available. < Required 1 Required 3 > Operating levels of capacity) 40,600 609,000 49,500 652.500 46,400 606,000 Flexible Budget Budgeted output (units) Budgeted labor (standard hours) Budgeted overhead (dollars) Variable overhead Fixed overhead Total overhead $1,205,200 783,000 52.488.200 $1,827,000 783.000 52.610.000 $1,948,800 783,000 52,731,800 Complete this question by entering your answers in the tabs below. During the current month, the company operated at 70% of capacity, employees worked 575,000 hours and the following actual overhead costs were incurred Required: Required 2 Required Compute the controllable variance. (Indicate the effect of each variance by selecting for favorable, unfavorable, and no variance.) $1,624,000 Variable overhead costs Fixed overhead costs Total overhead costs $2,490,000 Controllable Variance Exercise 21-18A Computing and interpreting overhead spending, efficiency, and volume variances LO P5 Controllable variance < Required 2 Required) AH-Actual Hours SH - Standard Hours AVR - Actual Variable Rate SVR Standard Variable Rate 1. Compute the variable overhead spending and efficiency variances 2. Compute the fored overhead spending and volume variances and classify each as favorable or unfavorable 3. Compute the controllable variance Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required) Compute the variable overhead spending and efficiency variances. (Indicate the effect of each variance by selecting for favorable, unfavorable, and no variance. Round nito 2 decimal places. Actual Variable OH Cost Flexible Budet Standard Cost (VOH applied) X AVR SVR

Answer 1

Solution 1:

Variable Overhead Cost Variance
Actual Cost					Standard cost for actual quantity					Standard Cost
AH *	AR =				AH *	SR =				SH *	SR =
575000	$2.82	$1,624,000.00			575000	$2.80	$1,610,000.00			609000	$2.80	$1,705,200.00
			$14,000.00	U				$95,200.00	F
			Variable overhead rate variance					Variable overhead efficiency variance
Variable overhead rate variance					$14,000.00	U
Variable overhead efficiency variance					$95,200.00	F
Variable overhead cost variance					$81,200.00	F

Solution 2:

Fixed Overhead Cost Variance

Actual Fixed OH Cost

Budgeted Fixed Overhead

Standard Cost (FOH Applies)

SH*

BR

$866,000.00

$783,000.00

609000

$1.20

$730,800.00

$83,000.00

U

$52,200.00

U

Fixed overhead Budget Variance

Fixed overhead volume variance

Fixed overhead Budget Variance

$83,000.00

U

Fixed overhead volume variance

$52,200.00

U

Total Fixed overhead variance

$135,200.00

U

Solution 3:

Overhead controllable variance
Variable Overhead rate Variance	$14,000.00	Unfavorable
Variable overhead efficiency variance	$95,200.00	Favorable
Fixed overhead spending variance	$83,000.00	Unfavorable
Overhead controllable variance	$1,800.00	Unfavorable