11-26

The following data are the actual results for Marvelous Marshmallow Company for October

Actual output ...................................................................................................................9,000 cases

Actual variable overhead .................................................................................$405,000

Actual fixed overhead......................................................................................$122,000

Actual machine time ......................................................................................40,500 machine hours

Standard cost and budget information for Marvelous Marshmallow Company follows:

Standard variable-overhead rate ......................................................$9.00 per machine hour Standard quantity of machine hours..........................................................$120,000 per month

Budgeted output ............................................................................10,000 cases per month

Required:

1. Use any of the methods explained in the chapter to compute the following variances. Indicate whether each variance is favorable or unfavorable, where appropriate.

a. Variable-overhead spending variance.

b. Variable-overhead efficiency variance.

c. Fixed-overhead budget variance.

d. Fixed-overhead volume variance.

2. Build a spreadsheet: Construct an Excel spreadsheet to solve the preceding requirement. Show how the solution will change if the following information changes: actual output was 9,100 cases, and actual variable overhead was $395,000.