Question
Total overhead, 3-variance analysis. Ames Fir Force Base has a bay that specializes in maintenance for aircraft engines. It uses standard costing and flexible budgets
Total overhead, 3-variance analysis. Ames Fir Force Base has a bay that specializes in maintenance for aircraft engines. It uses standard costing and flexible budgets to account for this activity. For 2014, budgeted variable overhead at a level of 8,000 standard monthly direct labor-hours was $64,000; budgeted total overhead at 10,000 standard monthly direct labor-hours was $197,600. The standard cost allocated to repair output included a total overhead rate of 120% of standard direct labor costs. | ||||||||||||||||||||||||||||||||||||||||||||
For February, Ames incurred a total overhead of $249,000 and direct labor costs of $202,440. The direct labor price variance was $9,640 unfavorable. The direct labor flexible-budget was $14,440 unfavorable. The standard price was $16 per hour. The production-volume variance was $14,000 favorable. | ||||||||||||||||||||||||||||||||||||||||||||
Summary of data provided: | ||||||||||||||||||||||||||||||||||||||||||||
Budgeted direct labor-hours 8,000 hours | ||||||||||||||||||||||||||||||||||||||||||||
Budgeted variable overhead costs | $64,000 | |||||||||||||||||||||||||||||||||||||||||||
Budgeted total overhead @ 10,000 standard direct labor-hours $197,600 | ||||||||||||||||||||||||||||||||||||||||||||
Standard total overhead allocation rate | 120% Standard Direct Labor Costs | |||||||||||||||||||||||||||||||||||||||||||
Actual total overhead incurred | $249,000 | |||||||||||||||||||||||||||||||||||||||||||
Actual direct labor costs | $202,440 | |||||||||||||||||||||||||||||||||||||||||||
Direct labor price variance | $9,640 (U) | |||||||||||||||||||||||||||||||||||||||||||
Direct labor flexible-budget variance | $14,440 (U) | |||||||||||||||||||||||||||||||||||||||||||
Standard price per hour | $16 | |||||||||||||||||||||||||||||||||||||||||||
Production-volume variance | $14,000 (F) | |||||||||||||||||||||||||||||||||||||||||||
|
2a) | Compute the total overhead spending variance | |||||
2b) | Is the variable overhead spending variance F(avorable) or U(nfavorable)? | |||||
2c) | Compute the total overhead efficiency variance? | |||||
2d) | Is the total overhead efficiency variance F(avorable) or U(nfavorable)? | |||||
2e) | Compute the total overhead spending variance? | |||||
2f) | Is the total overhead spending variance F(avorable) or U(nfavorable)? |
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