Requirements

Compute the overhead variances for the year: variable overhead cost variance, variable overhead efficiency variance, fixed overhead cost variance, and fixed overhead volume variance.

Explain why the variances are favorable or unfavorable.

Deluxe Fender uses a standard cost system and provide the following information:

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DeluxeFender allocates manufacturing overhead to production based on standard direct labor hours. DeluxeFender reported the following actual results for $2024$actual number of fenders produced, $20,000$ actual variable overhead, $$4,960$ actual fixed overhead, $$35,000$; actual direct labor hours, $450.$

Read the $q,$

Requirement $1.$ Compute the overhead variances for the year: variable overhead cost variance, variable overhead efficiency variance, fixed overhead cost variance, and fixed overhead volume variance.

Begin with the variable overhead cost and efficiency variances. Select the required formulas, compute the variable overhead cost and efficiency variances, and identify whether each variance is favorable $($F$)$ or unfavorable $($U$).($You may need to simply the formula based on the data provided. Abbreviations used: AC $=$ actual cost; $AQ=$ actual quantity; FOH$=$ fixed overhead; $SC=$ standard cost; $SQ=$ standard quantity; VOH$=$ variable overhead.$)$

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