Question
Franklin Glass Works uses a standard cost system in which manufacturing overhead is applied to units of product on the basis of direct labour-hours. Each
Franklin Glass Works uses a standard cost system in which manufacturing overhead is applied to units of product on the basis of direct labour-hours. Each unit requires two standard hours of labour for completion. The denominator activity for the year was based on budgeted production of 200,000 units. Total overhead was budgeted at R900,000 for the year, and the fixed overhead rate was R3.00 per unit. The actual data pertaining to the manufacturing overhead for the year are presented below:
Actual production198,000unitsActual direct labour-hours440,000direct labour-hoursActual variable overheadR352,000Actual fixed overheadR575,000
Franklin's variable overhead spending variance for the year is:
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