Problem $11-58$ Flexible Budget, Overhead Variances

Shumaker Company manufactures a line of high$-$top basketball shoes. At the beginning of the

year, the following plans for production and costs were revealed:

Pairs of shoes to be produced and sold $55,000$

Standard cost per unit:

Direct materials $$15$

Direct labor $12$

VOH $6$

FOH $3$

Total unit cost $$36$

During the year, a total of $50,000$ units were produced and sold. The following actual costs were

incurred:

Direct materials $$775,000$ VOH $$310,000$

Direct labor $590,000$ FOH $180,000$

There were no beginning or ending inventories of raw materials. In producing the $50,000$ units,

$63,000$ hours were worked, $5$ percent more hours than the standard allowed for the actual output.

Overhead costs are applied to production using direct labor hours.

Required:

$1.$ Using a flexible budget, prepare a performance report comparing expected costs for the

actual production with actual costs.

$2.$ Determine the following: $($a$)$ Fixed overhead spending and volume variances and $($b$)$ Variable

overhead spending and efficiency variances.Problem $11-58$ Flexible Budget, Overhead Variances

Shumaker Company manufactures a line of high$-$top basketball shoes. At the beginning of the

year, the following plans for production and costs were revealed:

During the year, a total of $50,000$ units were produced and sold. The following actual costs were

incurred:

There were no beginning or ending inventories of raw materials. In producing the $50,000$ units,

$63,000$ hours were worked, $5$ percent more hours than the standard allowed for the actual out$-$

put. Overhead costs are applied to production using direct labor hours.

Required:

Using a flexible budget, prepare a performance report comparing expected costs for the

actual production with actual costs.

Determine the following: $($a$)$ Fixed overhead spending and volume variances and $($b$)$ Variable

overhead spending and efficiency variances.$|$