6. Grand Fender uses a standard cost system and provide the following information: (Click the icon to view the information.) Grand Fender allocates manufacturing overhead to production based on standard direct labor hours. Grand Fender reported the following actual results for 2024: actual number of fenders produced, 20,000; actual variable overhead, $6,300; actual fixed overhead, $32,000; actual direct labor hours, 380 Read the requirements Requirement 1. Compute the overhead variances for the year: variable overhead cost variance, variable overhead efficiency variance, fixed overhead cost variance, and fixed overhead volume variance. Begin with the variable overhead cost and efficiency variances. Select the required formulas, compute the variable overhead cost and efficiency variances, and identify whether each variance is favorable (F) or unfavorable (U). (You may need to simply the formula based on the data provided. Abbreviations used: AC = actual cost: AQ = actual quantity: FOH = fixed overhead: SC = standard cost: SQ = standard quantity: VOH = variable overhead.) Formula Variance (2) (1) VOH cost variance = (3) VOH efficiency variance Now compute the fixed overhead cost and volume variances. Select the required formulas, compute the fixed overhead cost and volume variances, and identify whether each variance is favorable (F) or unfavorable (U). (Abbreviations used: AC = actual cost; AQ = actual quantity: FOH = fixed overhead; SC = standard cost: SQ = standard quantity.) Formula Variance (6) 11 (5) FOH cost variance (8) 11 (7) = FOH volume variance Requirement 2. Explain why the variances are favorable or unfavorable. than because management spent (10) The variable overhead cost variance is (9) budgeted for the actual production direct The variable overhead efficiency variance is (11) because management used (12) labor hours than standard and variable overhead is applied (incurred) based on direct labor. than the because management spent (14) The fixed overhead cost variance is (13) amount budgeted for fixed overhead. fixed because management allocated (16) The fixed overhead volume variance is (15) overhead to jobs than was budgeted. 1: Data Table $5,425 $31,000 Static budget variable overhead Static budget fixed overhead Static budget direct labor hours Static budget number of units Standard direct labor hours 775 hours 31,000 units 0.025 hours per fender 2: Requirements 1. Compute the overhead variances for the year: variable overhead cost variance, variable overhead efficiency variance, fixed overhead cost variance, and fixed overhead volume variance. 2. Explain why the variances are favorable or unfavorable. (1) O O (AC-SC) AQ O (AC-SC) XSQ O (AQ - SQ) AC O (AQ - SQ) X SC Actual FOH - Allocated FOH O Actual FOH - Budgeted FOH O Bugeted FOH - Allocated FOH (2) O OF OU (3) O O (AQ - SQ) SC O (AC-SC) * AQ O Actual FOH - Allocated FOH O (AC-SC) XSQ Actual FOH - Budgeted FOH O (AQ - SQ) AC O Bugeted FOH - Allocated FOH OF OU (5) O O (AQ - SQ) SC O (AC-SC) AQ O Actual FOH - Allocated FOH O (AC-SC) * SQ O Actual FOH - Budgeted FOH O (AQ - SQ) * AC O Bugeted FOH - Allocated FOH (6) O OF OU (7) O O (AQ - SQ) SC O (AC-SC) AQ O Actual FOH - Allocated FOH O (AC-SC) SQ O Actual FOH - Budgeted FOH O (AQ - SQ) AC O Bugeted FOH - Allocated FOH (8) O OF OU (9) O unfavorable O favorable (10) O more o less (11) O favorable unfavorable (12) O fewer O more (13) O unfavorable O favorable (14) O more O less (15) O unfavorable O favorable (16) O less O more 3/21/2021. 10:28 2 of 2