QUESTION B: Manufacturing overhead variances

Orion Inc. uses a standard costing system. Overhead costs are applied on the basis of direct labour hours.

Budgeted data for July are as follows:

Static Budget

Units Produced

126,000

Direct Labour Hours

56,700

Total Budgeted ManufacturingOverhead Costs

$130,410

Predetermined Fixed Manufacturing Overhead Rate $2.00 per DLH

Actual data for July are as follows:

Actual

Units Produced

115,000

Direct Labour Hours

55,000

Variable Overhead Costs

$18,250

Fixed Overhead Costs

$116,200

Required: (show all calculations below for full marks)Answer

1. What is the rate variance for variable overhead. __0___

(55000*3)-(55000*3)=

2. What is the efficiency variance for variable overhead?___3910___

(56700*2.30)-(55000*2.30)=

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QUESTION B: (Continued)

Answer

3. What is the Rate variance for fixed overhead?__3400__

( 55000-56700)*2=

4. What is the Production volume variance for

fixed overhead?_____60632___

(115000-56700)*1.04=