Question
Gerhan Company's flexible budget for the units manufactured in May shows $15,610 of total factory overhead; this output level represents 70% of available capacity. During
Gerhan Company's flexible budget for the units manufactured in May shows $15,610 of total factory overhead; this output level represents 70% of available capacity. During May, the company applied overhead to production at the rate of $3.00 per direct labor hour (DLH), based on a denominator volume level of 6,120 DLHs, which represents 90% of available capacity. The company used 6,000 DLHs and incurred $18,500 of total factory overhead cost during May, including $6,700 for fixed factory overhead.
1. What is the variable factory overhead spending variance?
2. What is the variable factory overhead efficiency variance?
3. What is the fixed factory overhead spending variance?
4. What is the fixed factory overhead production volume variance?
5. What is the flexible budget variance?
Please explain all answers thoroughly.
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