Question 4

Tesla Inc. has the following budgeted and actual data for the month of May:

Budgeted Data:

• Direct Labor Hours: 10,000
• Direct Labor Cost: $250,000
• Variable Overhead: $150,000
• Fixed Overhead: $200,000

Actual Data:

• Direct Labor Hours: 9,500
• Direct Labor Cost: $240,000
• Variable Overhead: $140,000
• Fixed Overhead: $210,000

Required:

1. Compute the variable overhead efficiency variance.
2. Calculate the fixed overhead volume variance.
3. Determine the total overhead variance.
4. Prepare a variance analysis report and interpret the results.