6-6/21

(please disregard numbers and chart, charts just used for reference of what needs to be solved.)

Superior Inc. uses a standard cost system and provides the following information Click the icon to view the information) Superior allocation manufacturing overhead to production based on standard direct labor hours, Superior reported the following actual results for 2024 adual number of unts produced 1,000 actual variable overhead. 55.000, actual fixed overhead $3.500 actual direct labor hours, 1,300 Read the requirements x Data Table $1,500 $2,250 Static budget variable overhead Static budget fixed overhead Static budget direct labor hours Static budget number of units Standard direct labor hours 750 hours 375 units 2 hours per unit Requirements 1. Compute the variable overhead cost and efficiency variances and fixed overhead cost and volume variances. 2. Explain why the variances are favorable or unfavorable. Requirement 1. Computo the variable overhead cost and efficiency variances and fixed overhead cost and volume variances Begin with the variable overhead cost and officiency variances Select the required formulas, compute the variable overhead cost and efficiency variances and identify whether each waves favorable (F) or unfavorable (U) (Abbrevions used. Ac actual con AQ actual quantity, FOHfied overhead, SC standardot, so standard quantity. VOH variable overed) Formula Variance VOH cost variance VOH efficiency variance Overhead I Actual quantity at Actual cost [Actual VOH] Standard cost (SC) Actual quantity (AQ) Standard quantity (SQ) per hr hours hours 4 Variance Formula Actual VOH - (SC AQ) $ 3,800 - $ 2.00 * 1,700 ) = VOH cost variance VOH efficiency variance (AQ - SQ) SC =(1,700 2,000 )* $ 2.00 Fixed A Overhead Actual fixed overhead costs incurred Budgeted fixed overhead costs 11 11 11 Allocated fixed overhead costs Formula Variance FOH cost variance FOH volume variance Actual FOH - Budgeted FOH = Bugeted FOH - Allocated FOH = $ 2,500 - $ 2,300 $ 2,300 $ 4,000 and efficie Cost variances (VOH or FOH) are labeled as favorable if the company spent less and unfavorable if the company AC = actu spent more. We compare budgeted costs to actual costs to find cost variances. Review each of the cost variances calculated in Requirement 1. Did Quality actually spend more or less than budgeted? Efficiency variances (VOH) compare the actual use of resources used to allocate overhead to production (direct labor hours in our problem) to a standard amount based on actual production. Did Quality use more hours to produce the 1000 units than would be expected at two direct labor hours per unit? If so, then the efficiency variance is unfavorable. I Volume variances (FOH) also compare the use of resources (direct labor in this problem) but they compare a standard amount to a budgeted amount. Review your calculation for this variance. Did Quality's standard number of hours (actual number of units produced multiplied by a standard of two direct labor hours per unit) exceed the budgeted hours (static budget)? If so, then the company applied more fixed overhead than was budgeted and the volume variance is labeled as favorable