Question

Glavine & Co. produces a single product, each unit of which requires three direct labor hours (DLHs). Practical capacity (for setting the factory overhead application rate) is 62,000 DLHs, on an annual basis. The information below pertains to the most recent year: $ Standard direct labor hours (DLHS) per unit produced Practical capacity, in DLHS (per year) Variable overhead efficiency variance Actual production for the year Budgeted fixed manufacturing overhead Standard direct labor wage rate Total overhead cost variance for the year Direct labor efficiency variance 3.00 62,000 21,000 unfavorable (U) 17,500 units $1,240,000 $ 20.00 per DLH $ 210,000 favorable (F) $ 42,000 unfavorable (U) Required: 1. What was the actual number of direct labor hours (DLHs) worked during the year? 2. What was the standard variable overhead rate per DLH during the year? 3. What was the total overhead application rate per direct labor hour (DLH) during the year? 4. What was the total actual overhead cost incurred during the year? 5. What was the Production Volume Variance for the year? Was this variance favorable (F) or unfavorable (U)? 6. What was the total Overhead Spending Variance for the year? Was this variance favorable (F) or unfavorable (U)?

Answer 1