Question
Overhead is applied on the basis of direct labor hours. Three direct labor hours are required for each product unit. Planned production for the period
Overhead is applied on the basis of direct labor hours. Three direct labor hours are required for each product unit. Planned production for the period was set at 8,000 units. Manufacturing overhead for the period is budgeted at $204,000, of which 30 percent is fixed. The 26,200 hours worked during the period resulted in production of8,500 units. Manufacturing overhead cost incurred was $220,500. Required: Using the spreadsheet provided on the following page, calculate the following variances: a. Overhead spending variance b. Overhead efficiency variance c. Overhead volume variance d. Total overhead variance e. Interpret your results
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