Question
Lancaster Ltd. produces a unique item. Lancaster's management team wishes to preform a variance analysis on its fixed overhead. Fixed overhead is applied to units
Lancaster Ltd. produces a unique item. Lancaster's management team wishes to preform a variance analysis on its fixed overhead. Fixed overhead is applied to units produced using direct labor hours as its cost driver. The company's managerial accountant has compiled the following information:
Projected data:
Estimated direct labor hours 40,000 hours
Estimated fixed overhead $90,000
Actual data:
Actual production 300,000 units
Actual direct labor hours used 50,000 hours
Actual fixed overhead $100,000
Required:
A. Compute the fixed overhead spending variance and identify if the variance is favorable or unfavorable.
B.Compute the fixed overhead volume variance and identify if the variance is favorable or unfavorable.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started