Homewood Farms's managers had estimated $215,000$ hours when they created the budget. Manufacturing overhead is allocated based on machine hours.

Requirements

Calculate the total manufacturing overhead variance. What does this

tell managers?

Determine the overhead flexible budget variance. Determine the three separate

variances that are involved in the flexible budget variance $($the variable overhead

spending and efficiency variances plus the fixed overhead budget variance$).$

What does this tell managers?

Determine the production volume variance. What does this tell managers?

Double check: Do the two variances $($computed in Requirements $2$ and $3)$ sum

to the total overhead variance computed in Requirement $1?$ Calculate the total manufacturing overhead variance. What does this tell managers?

Identify the formula labels, and calculate the total overhead variance.

Total overhead variance

The variance tells managers that Homewood Farms incurred $$145,000$ less in total manufacturing overhead than the amount of overhead applied.

does this tell managers?

Identify the formula labels, and calculate the overhead flexible budget variance.

Overhead flexible budget variance:

Flexible budget overhead for actual outputs

Overhead flexible budget variance Overhead flexible budget variance

$-82,500$

The variance tells managers that Homewood Farms actually incurred $$

for manufacturing overhead than they would have expected for the actual volume of french fries produced during the year.

Identify the formula labels, and calculate the variable overhead spending variance. $($Do not round intermediary calculations. Only round the amount you input in the cell to the nearest dollar.$)$

Variable overhead spending variance:

$1,890,000$

Variable overhead spending variance

This variance implies that Homewood Farms spent $

Identify the formula labels, and calculate the variable overhead efficiency variance. $($Do not round intermediary calculations. Only round the amount you input in the cell to the nearest dollar.$)$

This variance implies that Homewood Farms was $

$$

efficient with its variable overhead since it used

hours and the rate is $$

per hour. This variance implies that Homewood Farms was $

efficient with its variable overhead since it used

hours and the rate is $ per hour.

Identify the formula labels, and calculate the fixed overhead budget variance. $($Do not round intermediary calculations. Only round the amounts entered in the cells to the nearest dollar.$)$

Livor nuorhoad hudnot varianro.

Fixed overhead budget variance

This implies that Homewood Farms used

fixed overhead than it originally budgeted for.

Determine the production volume variance. What does this tell managers?

Identify the formula labels, and calculate the production volume variance.

Production volume variance:Determine the production volume variance. What does this tell managers?

Identify the formula labels, and calculate the production volume variance.

Production volume variance:

Production volume variance

This variance tells managers Homewood Farms used its plant capacity

efficiently than originally anticipated.

Double check: Do the two variances $($computed in Requirements $2$ and $3)$ sum to the total overhead variance computed in Requirement $1?$

Yes

No