Artco manufactures fiberglass home and office planters in a variety of decorator colors. These planters, in three sizes, are used to hold indoor plants. Overhead is allocated based on the standard pounds of fiberglass per planter. Here are standards for the three planters:

Artco uses a flexible budget to calculate overhead rates at the beginning of the year. Fixed overhead for the year is budgeted at $ 593,950, and variable overhead is budgeted at $ 2.10 per pound of fiberglass. Actual overhead incurred is $ 633,805. The accompanying table summarizes the actual results for the year.

Required:
a. Calculate the total variance (over/ under absorbed) if standard pounds are used to assign overhead to products.
b. Calculate the total overhead variance (over/ under absorbed) if actual pounds are used to assign overhead to products.
c. Explain why the answers differ in parts (a) and (b).

Transcribed Image Text:

Standard Pounds/Pianter Product Expected Units 24" planter 30 planter 36" planter 23 3.7 4.6 1,200 2.100 1.400 Pounds of Fiberglass Used Units Produced 1,400 2,000 1500 Product 24" planter 30 planter 36" planter 3,570 7,040 7.120