Question

In the most recent month, 200,000 items were shipped to customers using 8,900 direct labor-hours. The company incurred a total of $32,040 in variable overhead costs According to the company's standards, 0.03 direct labor-hours are required to fulfill an order for one item and the variable overhead rate is $3.65 per direct labor-hour. points Skipped Required: 1. What is the standard labor-hours allowed (SH) to ship 200,000 items to customers? 2. What is the standard variable overhead cost allowed (SH SR) to ship 200,000 items to customers? 3. What is the variable overhead spending variance? 4. What is the variable overhead rate variance and the variable overhead efficiency variance? eBook (For requirements 3 and 4, indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values. Do not round intermediate calculations.) Hint Print 1. Standard quantity of labor-hours allowed 2. Standard variable overhead cost allowed 3. Variable overhead spending variance 4. Variable overhead rate variance Variable overhead efficiency variance References

Answer 1

Solution

Standard labor hours Allowed	6000
Standard variable overhead cost allowed	$      21,900.00
Variable overhead Spending Variance	$      10,140.00	Unfavourable-U
Variable overhead Rate Variance	$            445.00	Favourable-F
Variable overhead Efficiency Variance	$      10,585.00	Unfavourable-U

Working

Variable Overhead Rate Variance
(	Standard Rate	-	Actual Rate	)	x	Actual Labor Hours
(	$                    3.65	-	$                     3.60	)	x	8900
	$               445.00
	Variance		$                 445.00			Favourable-F
Variable Overhead Efficiency Variance
(	Standard Hours	-	Actual Hours	)	x	Standard Rate
(	6000	-	8900	)	x	$              3.65
	$       (10,585.00)
	Variance		$           10,585.00			Unfavourable-U
Variable Overhead Spending Variance
(	Standard Cost	-	Actual Cost	)
(	$         21,900.00	-	$           32,040.00	)
	-10140
	Variance		$           10,140.00			Unfavourable-U

.

Standard DATA for		200000	Items
	Quantity (SQ)	Rate (SR)	Standard Cost
	[A]	[B]	[A x B]
Variable Overhead	( 0.03 Hour x 200000 Items)=6000 Hour	$                   3.65	$            21,900.00

.

Actual DATA for		200000	Items
	Quantity (AQ)	Rate (AR)	Actual Cost
Variable Overhead	8900	$            3.60	$          32,040.00