Question
Garment Ltd. is a clothing manufacturer that uses a standard costing system and flexible budget for factory overhead. Standard cost details for producing one jacket
Garment Ltd. is a clothing manufacturer that uses a standard costing system and flexible budget for factory overhead. Standard cost details for producing one jacket is given below:
Factory overhead is applied on the basis of standard direct labour hours. For the month of November, the following actual results are observed:
4500 meters of direct material were purchased at a cost of $95,200. The company had beginning direct material of 450 meters and ending material of 800 meters for the period. Direct labour usage was 4,550 Direct Labour Hours (DLH) at a cost of $32.00 per DLH.
5,500 units were sold in the period. Opening finished goods for the period was 1,400 units and ending finished goods was 1,750 units units. Factory overhead incurred was $299,200 of which $160,000 was considered to be fixed.
Required:
1. Calculate Variable overhead spending variance (VPHSV = Actual VOH - SVOR x AH)
2. Calculate Variable overhead efficiency variance VOHEV = (AH - SH) x SVOR
DirectmaterialDirectlabourVariableoverheadFixedoverheadTotalUsage(consumedperunit)1.250.80Rate$$18.20$35.00$24.00$36.50$111.25Standardcostperunit$22.75$28.00Step by Step Solution
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