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Calculating the Variable Overhead Spending and Efficiency Variances Standish Company manufactures consumer products and provided the following information for the month of February: Units produced131,200Standard
Calculating the Variable Overhead Spending and Efficiency Variances
Standish Company manufactures consumer products and provided the following information for the month of February:
Units produced131,200Standard direct labor hours per unit0.2Standard variable overhead rate (per direct labor hour)$3.40Actual variable overhead costs$88,700Actual hours worked26,550
Calculating the Variable Overhead Spending and Efficiency Variances Standish Company manufactures consumer products and provided the following information for the month of February: Units produced Standard direct labor hours per unit Standard variable overhead rate (per direct labor hour) Actual variable overhead costs Actual hours worked Required: 131,200 0.2 $3.40 $88,700 26,550 1. Calculate the variable overhead spending variance using the formula approach. (If you compute the actual variable overhead rate, carry your computations out to five significant digits and round the variance to the nearest dollar.) 2. Calculate the variable overhead efficiency variance using the formula approach. 3. What if 26,100 direct labor hours were actually worked in February? What impact would that have had on the variable overhead spending variance? What impact would that have had on the variable overhead efficiency variance?
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