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The following information is available for the quarter: - The denominator activity level of 60,000 machine hours is the budgeted level of the activity driver used to calculate the pre-determined OH rate. - As a standard rule 60,000 machine hours should remove 40,000 tattoos at the standard rate of 1.5 hours/tattoo. - The actual operating results are as follows: Number of Units Produced Actual Machine Hours 42,835 64,136 $186,094 $302,327 Actual Variable OH Cost Actual FOH Cost Stella's Invisible Ink Inc. removes unwanted tattoos for that occasional instance when a butterfly tattoo on the small of a grown man's back is no longer wanted). The tattoo removal process requires the use of lasers from a tattoo removal machine. The budget for Stella's is listed below: Machine Hours Variable OH Costs Fixed OH Costs Total OH Costs Budgets 66,289 S180.479 S300,206 S480.685 The following information is available for the quarter: - The denominator activity level of 60.000 machine hours is the budgeted level of the activity driver used to calculate the pre-determined OH rate. - As a standard rule 60,000 machine hours should remove 40,000 tattoos at the standard rate of 1.5 hours/tattoo. ROUND ALL CALCULATIONS TO THE NEAREST HUNDREDTH (two decimal places). 1. Calculate the VOH spending variance. Enter the ABSOLUTE VALUE of the variance. Then select the direction of the variance by choosing either Favorable or Unfavorable below. VOH Spending Variance O Favorable Unfavorable 2. Explain why the VOH Spending variance is favorable/unfavorable in words: O A. Actual quantity of machine hours is gre OB. Actual VOH rate is less than expected. OC. Actual quantity of machine hours is less than expected, D. Actual VOH rate is greater than exnected 3. Calculate Variable OH Efficiency variance. Enter the ABSOLUTE VALUE of the variance. Then select the direction of the variance by choosing either Favorable or Unfavorable below. VOH Efficiency Variance Favorable O Unfavorable 4. Calculate Fixed OH Budget variance. Enter the ABSOLUTE VALUE of the variance. Then select the direction of the variance by choosing either Favorable or Unfavorable below. FOH Budget Variance Favorable Unfavorable 5. Calculate the FOH Volume Variance. Enter the ABSOLUTE VALUE of the variance. Then select the direction of the variance by choosing either Favorable or Unfavorable below. FOH Volume Variance Favorable Unfavorable 6. Explain why the VOH Spending variance is favorable/unfavorable in words: O A. The firm produced a lower volume of units than they expected. O B. The firm used FOH more efficiently than they expected. O C. The firm used FOH less efficiently than they expected. OD. The firm produced a higher volume of units than they expected. E. None of the above
