Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Overhead Variances, Two- And Three-Variance Analyses Oerstman, Inc., uses a standard costing system and develops its overhead rates from the current annual budget. The budget

Overhead Variances, Two- And Three-Variance Analyses

Oerstman, Inc., uses a standard costing system and develops its overhead rates from the current annual budget. The budget is based on an expected annual output of 120,000 units requiring 480,000 direct labor hours. (Practical capacity is 500,000 hours.) Annual budgeted overhead costs total $739,200, of which $542,400 is fixed overhead. A total of 119,300 units using 478,000 direct labor hours were produced during the year. Actual variable overhead costs for the year were $241,300, and actual fixed overhead costs were $556,350.

Required:

1. Compute overhead variances using a two-variance analysis.

Budget Variance $ Unfavorable
Volume Variance $ Unfavorable

2. Compute overhead variances using a three-variance analysis.

Spending Variance $ Unfavorable
Efficiency Variance $ Unfavorable
Volume Variance $ Unfavorable

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Internal Control Anti Fraud Program Design For The Small Business

Authors: Steve Dawson

1st Edition

1119065070, 978-1119065074

More Books

Students also viewed these Accounting questions