Exercise 21-21 Overhead controllable and volume variances; overhead variance report LO P4 James Corp. applies overhead on the basis of direct labor hours. For the month of May, the company planned production of 10,000 units (80% of its production capacity of 12,500 units) and prepared the following overhead budget: Operating Levels 80% 10,000 25,000 Overhead Budget Production in units Standard direct labor hours Budgeted overhead Variable overhead costs Indirect materials Indirect labor Power Maintenance Total variable costs Fixed overhead costs Rent of factory building Depreciation Machinery Supervisory salaries Total fixed costs Total overhead costs $16,000 25,000 6,000 3,000 50,000 13,000 11,900 15,100 40,000 $90,000 During May, the company operated at 90% capacity (11.250 units) and incurred the following actual overhead costs. Overhead costs (actual) Indirect materials Indirect labor Power $16,000 27,675 6,750 During May, the company operated at 90% capacity (11,250 units) and incurred the following actual overhead costs: Overhead costs (actual) Indirect materials Indirect labor Power Maintenance Rent of factory building Depreciation Machinery Supervisory salaries Total actual overhead costs $16,000 27,675 6,750 4,210 13,000 11,990 18,500 $98,035 1. Compute the overhead controllable variance and classify it as favorable or unfavorable. 2. Compute the overhead volume variance and classify it as favorable or unfavorable. 3. Prepare an overhead Variance report at the actual activity level of 11,250 units. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Compute the overhead controllable variance and classify it as favorable or unfavorable. (Indicate the effect of each variance by selecting for favorable, unfavorable, and no variance.) Controllable variance $ Total actual overhead 98,035 Depreciation Machinery 11,900 Supervisory salaries 18,500 Total actual overhead costs $98,035 1. Compute the overhead controllable variance and classify it as favorable or unfavorable. 2. Compute the overhead volume variance and classify it as favorable or unfavorable. 3. Prepare an overhead variance report at the actual activity level of 11,250 units. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Compute the overhead controllable variance and classify it as favorable or unfavorable. (Indicate the effect of each variance by selecting for favorable, unfavorable, and no variance.) Controllable variance $ 98,035 Total actual overhead Flexible budget overhead Fixed Variable Total Overhead controllable variance Unfavorable Required 1 Required 2 > Depreciation Machinery Supervisory salaries Total actual overhead costs 11,900 18,500 $98,035 1. Compute the overhead controllable variance and classify it as favorable or unfavorable. 2. Compute the overhead volume variance and classify it as favorable or unfavorable. 3. Prepare an overhead variance report at the actual activity level of 11,250 units. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Compute the overhead volume variance and classify it as favorable or unfavorable. (Indicate the effect of each variance by selecting for favorable, unfavorable, and no variance. Do not round intermediate calculations.) Volume Variance Total fixed overhead applied Total budgeted fixed OH Volume variance Favorable (Required 1 Required 3 > Required 1 Required 2 Required 3 Prepare an overhead variance report at the actual activity level of 11,250 units. Classify as favorable or unfavorable. (Indicate the effect of each variance by selecting for favorable, unfavorable, and no variance. Do not round intermediate calculations.) JAMES CORP. Overhead Variance Report For Month Ended May 31 Expected production volume Production level achieved Volume variance Controllable Variance Variable overhead costs: Flexible Budget Actual Results Variances Fav./Unfav. Fixed overhead costs: Total overhead costs
