18.17 Ferguson Farrar Limited is a manufacturing company. For the month of April 20X3 it budgeted for 4000 units of production, each to use 1.5 hours of machine time. Production overhead absorption rates were budgeted as follows:

Variable production overhead = £4 per machine hour. Fixed production overhead = £8 per machine hour.

The actual level of production in the month was 4200 units.

The original production overhead budget, the flexed budget and the actual expenditure are shown in the following table:

Original Flexed budget budget Actual

£

£

£

Variable production overheads 24 000 25 200 26 250 Fixed production overheads 48 000 50400 48 750 72 000 75 600 75 000 Calculate:

a) the variable production overhead variance

b) the fixed production overhead variance.

Feltham Finch Limited is a manufacturing company. For the month of August 20X4 it budgeted for 780 units of production, each to use four hours of machine time. Production overhead absorption rates were budgeted as follows:

Variable production overhead

= £2.80 per machine hour.

Fixed production overhead =

£7.60 per machine hour.

The actual level of production in the month was 760 units.

The original production overhead budget, the flexed budget and the actual expenditure are shown in the following table:

Original Flexed budget budget Actual

£

£

£

Variable production overheads 8 736 8512 8476 Fixed production overheads 23712 23 104 24160 32 448 31 616 32 636 Calculate:

i) the variable production overhead variance ii) the fixed production overhead variance.