(AC - SC) XAQ (AC - SC) x SQ (AQ - SQ) X AC (AQ - SQ) SC Actual FOH - Allocated FOH Actual FOH - Budgeted FOH Bugeted FOH - Allocated FOH Deluxe Fender uses a standard post system and provide the following information: (Click the icon to view the information.) Deluxe Fender allocates manufacturing overhead to production based on standard direct labor hours. Deluxe Fender reported the following actual results for 2018: actual number of fenders produced, 20,000: actual variable overhead, S4,850: actual fixed overhead, $30,000; actual direct labor hours, 450. 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 untavorable (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 VOH cost variance VOH efficiency variance i Data Table able (F) or unfavorable (U). (Abbreviations used: AC = Now compute the fixed overhead cost and volume variances. Select the required formulas, compute the fixed over actual cost: AQ = actual quantity: FOH = fixed overhead; SC = standard cost; SQ = standard quantity.) Formula Variance FOH cost variance $ 3,500 $ 28,000 FOH volume variance Static budget variable overhead Static budget fixed overhead Static budget direct labor hours Static budget number of units Standard direct labor hours 700 hours Requirement 2. Explain why the variances are favorable or unfavorable. The variable overhead cost variance is unfavorable because management spent more than budgeted for the 28.000 units 0.025 hours per fender The variable overhead efficiency variance is favorable because management used fewer direct labor hours bor. Print Done Choose from any list or enter any number in the input fields and then continue to the next question. ? Deluxe Fender uses a standard cost system and provide the following information: Click the icon to view the information.) Deluxe Fender allocates manufacturing overhead to production based on standard direct labor hours. Deluxe Fender reported the following actual results for 2018: actual number offenders produced, 20,000; actual variable overhead, $4,850; actual fixed overhead, $30,000: actual direct labor hours, 450. Read the requirements. Formula Variance VOH cost variance 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 FOH cost variance Y FOH volume variance = Requirement 2. Explain why the variances are favorable or unfavorable. The variable overhead cost variance is unfavorable because management spent more than budgeted for the actual production. The variable overhead efficiency varlance is favorable because management used fewer direct labor hours than standard and variable overhead is applied (Incurred) based on direct labor. The fixed overhead cost variance is because management spent than the amount budgeted for fixed overhead. The fixed overhead volume variance is because management allocated fixed overhead to jobs than was budgeted
