Question
12.- Overhead Variances At the beginning of the year, Lopez Company had the following standard cost sheet for one of its chemical products: Direct materials
12.- Overhead Variances
At the beginning of the year, Lopez Company had the following standard cost sheet for one of its chemical products:
Direct materials (4 lbs. @ $2.80) $11.20 Direct labor (2 hrs. @ $18.00) 36.00 FOH (2 hrs. @ $5.20) 10.40 VOH (2 hrs. @ $0.70) 1.40 Standard cost per unit $59.00
Lopez computes its overhead rates using practical volume, which is 80,000 units. The actual results for the year are as follows: (a) Units produced: 79,600; (b) Direct labor: 158,900 hours at $18.10; (c) FOH: $831,000; and (d) VOH: $112,400.
Required:
1. Compute the variable overhead spending and efficiency variances. Enter amounts as positive numbers and select Favorable or Unfavorable.
Spending variance $fill in the blank 1 FavorableUnfavorable Efficiency variance $fill in the blank 3 FavorableUnfavorable
2. Compute the fixed overhead spending and volume variances. Enter amounts as positive numbers and select Favorable or Unfavorable.
Spending variance $fill in the blank 5 FavorableUnfavorable Volume variance $fill in the blank 7 FavorableUnfavorable
Overhead Variances
At the beginning of the year, Lopez Company had the following standard cost sheet for one of its chemical products:
| Direct materials (4 lbs. @ $2.80) | $11.20 | ||
| Direct labor (2 hrs. @ $18.00) | 36.00 | ||
| FOH (2 hrs. @ $5.20) | 10.40 | ||
| VOH (2 hrs. @ $0.70) | 1.40 | ||
| Standard cost per unit | $59.00 |
Lopez computes its overhead rates using practical volume, which is 80,000 units. The actual results for the year are as follows: (a) Units produced: 79,600; (b) Direct labor: 158,900 hours at $18.10; (c) FOH: $831,000; and (d) VOH: $112,400.
Required:
1. Compute the variable overhead spending and efficiency variances. Enter amounts as positive numbers and select Favorable or Unfavorable.
| Spending variance | $fill in the blank 1 | FavorableUnfavorable | |
| Efficiency variance | $fill in the blank 3 | FavorableUnfavorable |
2. Compute the fixed overhead spending and volume variances. Enter amounts as positive numbers and select Favorable or Unfavorable.
| Spending variance | $fill in the blank 5 | FavorableUnfavorable | |
| Volume variance | $fill in the blank 7 | FavorableUnfavorable |
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