Question
Edina Co. manufactures a product that requires 3.5 machine hours per unit. The variable and fixed overhead rates were computed using expected capacity of 144,000
Edina Co. manufactures a product that requires 3.5 machine hours per unit. The variable and fixed overhead rates were computed using expected capacity of 144,000 units (produced evenly throughout the year) and expected variable and fixed overhead costs, respectively, of $2,016,000 and $3,528,000. In October, Edina manufactured 11,800 units using 40,800 machine hours. October variable overhead costs were $171,000; fixed overhead costs were $284,500.
a. What are the standard variable and fixed overhead rates?
b. Compute the variable overhead variances.
c. Compute the fixed overhead variances.
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