Gala Enterprises collected the following data regarding production of one of its products. Compute the variable overhead cost variance, the variable overhead spending variance, the variable overhead efficiency variance, the fixed overhead cost variance, the fixed overhead spending variance, and the fixed overhead volume variance. Direct labor standard (2 hrs. @ $15/hr.)$30.00 per finished unitActual direct labor hours60,800 hrs.Budgeted units31,000 unitsActual finished units produced30,000 unitsStandard variable OH rate (2 hrs. @ $14.00/hr.)$28.00 per finished unitStandard fixed OH rate ($310,000/31,000 units)$10.00 per unitActual variable overhead costs incurred$857,600Actual fixed overhead costs incurred$312,000
What will be an ideal response?
Variable overhead cost variance:
Actual variable overhead costs = $857,600
Applied = 30,000 ? $28.00 = $840,000
Variable overhead cost variance = $17,600 unfavorable
Actual variable overhead costs = $857,600
AH ? SVR = (60,800 ? $14.00) = $851,200
Variable overhead spending variance = $6,400 unfavorable
AH ? SVR = (60,800 ? $14.00) = $851,200
Applied = SH ? SVR = (60,000 ? $14.00) = $840,000
Variable overhead efficiency variance = $11,200 unfavorable
Fixed overhead cost variance:
Actual fixed overhead costs = $312,000
Applied = 30,000 ? $10.00 = $300,000
Fixed overhead cost variance = $12,000 unfavorable
Actual fixed overhead = $312,000
Budgeted overhead = $310,000
Fixed overhead spending variance = $2,000 unfavorable
Budgeted overhead = $310,000
Applied overhead = 30,000 ? $10.00 = $300,000
Volume variance = $10,000 unfavorable
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