OH variances

The manager of the Texas Department of Transportation has determined that it typically takes $30$ minutes for the department$$s employees to register a new car. In Bexar County, the predetermined fixed overhead rate was computed on an estimated $12,000$ direct labor hours per month and is $$9$ per direct labor hour, whereas the predetermined variable overhead rate is $$3$ per direct labor hour.

During July, $22,560$ cars were registered in Bexar County, and $11,400$ direct labor hours were worked in registering those vehicles. For the month, variable overhead was $$33,240$ and fixed overhead was $$108,960.$

Note: In answering the following questions, do not use negative signs with your answers.

a$.$ Compute overhead variances using a four$-$variance approach.

VOH Spending Variance

Actual VOH $-$ Budgeted VOH $=$ VOH Spending Variance

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$=$ Answer

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VOH Efficiency Variance

Budgeted VOH $-$ Applied VOH $=$ VOH Efficiency Variance

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$=$ Answer

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FOH Spending Variance

Actual FOH $-$ Budgeted FOH $=$ FOH Spending Variance

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$=$ Answer

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FOH Volume Variance

Budgeted FOH $-$ Applied FOH $=$ FOH Volume Variance

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$=$ Answer

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b$.$ Compute overhead variances using a three$-$variance approach.

OH Spending Variance

Actual OH $-$ Budget at Actual $=$ OH Spending Variance

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$-$ Answer

$=$ Answer

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OH Efficiency Variance

Budget at Actual $-$ Budget at Standard $=$ OH Efficiency Variance

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$=$ Answer

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Volume Variance

Budget at Standard $-$ Applied OH $=$ Volume Variance

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$=$ Answer

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c$.$ Compute overhead variances using a two$-$variance approach.

Budget Variance

Actual OH $-$ Budgeted OH $=$ Budget Variance

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$=$ Answer

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Volume Variance

Budgeted OH $-$ Applied OH $=$ Volume Variance

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$-$ Answer

$=$ Answer

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