A company applies overhead using machine hours. Additional information follows. Standard variable overhead rate Actual variable overhead rate Standard hours of machine use (for actual production) Actual hours of machine use AH Actual Hours AVR Actual Variable Rate SH Standard Hours SVR Standard Variable Rate $ 5.80 per machine hour $ 6.00 per machine hour 6,100 hours 6,250 hours.
A company applies overhead using machine hours. Additional information follows. Standard variable overhead rate Actual variable overhead rate Standard hours of machine use (for actual production) Actual hours of machine use AH Actual Hours AVR Actual Variable Rate SH Standard Hours SVR Standard Variable Rate $ 5.80 per machine hour $ 6.00 per machine hour 6,100 hours 6,250 hours.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Variance Analysis
In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.
Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
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Transcribed Image Text:A company applies overhead using machine hours. Additional information follows.
Standard variable overhead rate
Actual variable overhead rate
Standard hours of machine use (for actual production)
Actual hours of machine use
AH = Actual Hours
AVR = Actual Variable Rate
SH= Standard Hours
SVR Standard Variable Rate
Compute the variable overhead spending, efficiency variances and the total variable overhead variance. Identify each variance as
favorable or unfavorable.
Note: Indicate the effect of each variance by selecting favorable, unfavorable, or no variance.
Actual Variable Overhead
$ 5.80 per machine hour
$ 6.00 per machine hour
6,100 hours
6,250 hours
Flexible Budget Variable OH
Standard Applied Variable OH
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