Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Overhead variances: manufacturer Zapp Ltd is a manufacturer of electrical switches, and uses a standard costing system. The standard manufacturing overhead costs per switch are
Overhead variances: manufacturer Zapp Ltd is a manufacturer of electrical switches, and uses a standard costing system. The standard manufacturing overhead costs per switch are based on direct labour hours and are as follows: $180 Variable overhead (5 hours @ $36 per hour) Fixed overhead (5 hours @ $54 per hour)* Total overhead 270 $450 * Based on capacity of 300 000 direct labour hours per month. The following information is available for October: 56 000 switches were produced, although 60 000 switches were budgeted. 275 000 direct labour hours were worked at a total cost of $11 475 000. Variable overhead costs were $10 530 000. Fixed overhead costs were $16 875 000. Required: Calculate the variable overhead spending and efficiency variances and the fixed overhead budget and volume variances for October. Indicate whether each variance is favourable or unfavourable
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