You have been asked to prepare an analysis of the overhead costs in the order processing department
Question:
You have been asked to prepare an analysis of the overhead costs in the order processing department of a mail-order company. As an initial step, you prepare a summary of some events that bear on overhead for the most recent period. Variable overhead is applied based on hours of processing-clerk labour. The standard variable overhead rate per order was $0.06. The rate of 10 orders per hour is regarded as standard productivity per clerk. The total overhead incurred was $203,600, of which $135,900 was fixed. The fixed overhead spending variance was $400 unfavourable. The variable overhead flexible-budget variance was $5,600 unfavourable. The variable overhead spending variance was $3,000 favourable. Find the following:
1. Variable overhead efficiency variance
2. Actual hours of input
3. Standard hours of input allowed for output achieved
4. Budgeted fixed overhead
Step by Step Answer:
Management Accounting
ISBN: 978-0132570848
6th Canadian edition
Authors: Charles T. Horngren, Gary L. Sundem, William O. Stratton, Phillip Beaulieu