Question
Overhead Cost and Variance Relationships Fargo Corporation reported a $800 favorable price variance for variable overhead and a $8,000 favorable price variance for fixed overhead.
Overhead Cost and Variance Relationships
Fargo Corporation reported a $800 favorable price variance for variable overhead and a $8,000 favorable price variance for fixed overhead. The flexible budget had $513,600 variable overhead based on 21,400 direct labor-hours; only 21,200 hours were worked. Total actual overhead was $869,600. The number of estimated hours for computing the fixed overhead application rate totaled 22,000 hours.
Required:
1. Prepare a variable overhead analysis. Make sure you show all of your work to compute/recreate the efficiency and price (spending) variance.
2. Prepare a fixed overhead analysis. Make sure you show all of your work to compute/recreate the production volume variance and price (spending) variance.
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