Question

BUDGETED
Direct Materials	5.00	lbs. per unit	$30.00	per lbs.
Direct Labor	2.00	hours per unit	$25.00	per hour
VMOH	$3,200,000
FMOH	$5,600,000
MHRS	80,000	MHRS
Production volume	40,000	units
Allocation base	MHRS
ACTUAL
Direct Materials	4.50	lbs. per unit	$32.00	per lbs.
Direct Labor	2.50	hours per unit	$22.00	per hour
VMOH	$3,192,000
FMOH	$5,300,000
MHRS	84,000	MHRS
Production volume	35,000	units

Variable Manufacturing Overhead Variances
Actual Costs						Allocated:
AQ	AR		AQ	BR		SQA		BR
		VMOH SP Var			VMOH E Var
				VMOH FBV
Fixed Manufacturing Overhead Variances

Answer 1

Solution:

Variable Overhead Cost Variance
Actual Cost					Standard cost for actual quantity					Standard Cost
AH*	AR =				AH*	SR =				SH *	SR =
84000	$38.00	$3,192,000.00			84000	$40.00	$3,360,000.00			70000	$40.00	$2,800,000.00
			$168,000.00	F				$560,000.00	U
			Variable overhead rate Variance					Variable overhead efficiency variance
Variable overhead spending variance			$168,000.00	F
Variable overhead efficiency variance			$560,000.00	U
Variable overhead cost variance			$392,000.00	U