Question
Requirements: 1. Compute the overhead variances for the month: variable overhead cost variance, variable overhead efficiency variance, fixed overhead cost variance, and fixed overhead volume
Requirements: 1. Compute the overhead variances for the month: variable overhead cost variance, variable overhead efficiency variance, fixed overhead cost variance, and fixed overhead volume variance. 2. Explain why the variances are favorable or unfavorable.
Static budget variable overhead | $7,500 |
|
Static budget fixed overhead | $3,000 |
|
Static budget direct labor hours | 1,500 | hours |
Static budget number of units | 7,500 | units |
Watson
allocates manufacturing overhead to production based on standard direct labor hours. Last month,
Watson
reported the following actual results: actual variable overhead,
$10,700;
actual fixed overhead,
$2,830;
actual production of
7,100
units at
0.40
direct labor hours per unit. The standard direct labor time is
0.2
direct labor hours per unit
(1,500 static direct labor hours /7,500 static units).
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