The following information is available from Pavit Company for its operations in March: • Factory overhead incurred $40,000 • Variable overhead expenses, incurred $24,150 • Fixed overhead expenses, budgeted $18,000 • Direct labor hours (DLH) worked 4,200 • Standard direct labor hours allowed for the units manufactured 4,000 • Denominator level of activity, in DLHS 4,500 • Actual variable Overhead rate/DLH worked $5.75 • Standard variable overhead rate per DLH $5.00 Pavit uses direct labor hours (DLHS) to apply factory overhead cost. Required: 1. Compute the spending, efficiency and flexible-budget variances for Pavit's variable overhead in March 2021. 2. Compute the spending, production-volume and flexible-budget variances for Pavit's fixed overhead in March 2021.
The following information is available from Pavit Company for its operations in March: • Factory overhead incurred $40,000 • Variable overhead expenses, incurred $24,150 • Fixed overhead expenses, budgeted $18,000 • Direct labor hours (DLH) worked 4,200 • Standard direct labor hours allowed for the units manufactured 4,000 • Denominator level of activity, in DLHS 4,500 • Actual variable Overhead rate/DLH worked $5.75 • Standard variable overhead rate per DLH $5.00 Pavit uses direct labor hours (DLHS) to apply factory overhead cost. Required: 1. Compute the spending, efficiency and flexible-budget variances for Pavit's variable overhead in March 2021. 2. Compute the spending, production-volume and flexible-budget variances for Pavit's fixed overhead in March 2021.
Managerial Accounting
15th Edition
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:Carl Warren, Ph.d. Cma William B. Tayler
Chapter2: Job Order Costing
Section: Chapter Questions
Problem 4BE: Applying factory overhead Bergan Company estimates that total factory overhead costs will be 620,000...
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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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