Calgary Paper Company produces paper for photocopiers. The company has developed standard overhead rates based on a monthly capacity of 62,000 direct-labor hours as follows: Standard costs per unit (one box of paper): Variable overhead (2 direct-labor hours @ $4.5 per hour) $ 9 Fixed overhead (2 direct-labor hours @ $10 per hour) 20 Total $ 29 During April, 31,000 units were scheduled for production; however, only 26,000 units were actually produced. The following data relate to April. Actual direct-labor cost incurred was $848,000 for 53,000 actual hours of work. Actual overhead incurred totaled $843,800, of which $243,800 was variable and $600,000 was fixed. Required: Prepare two exhibits similar to Exhibit 11-6 and Exhibit 11-8 in the chapter, which show the following variances. State whether each variance is favorable or unfavorable, where appropriate. 1. Variable-overhead spending variance. 2. Variable-overhead efficiency variance. 3. Fixed-overhead budget variance. 4. Fixed-overhead volume variance.
Calgary Paper Company produces paper for photocopiers. The company has developed standard overhead rates based on a monthly capacity of 62,000 direct-labor hours as follows: Standard costs per unit (one box of paper): Variable overhead (2 direct-labor hours @ $4.5 per hour) $ 9 Fixed overhead (2 direct-labor hours @ $10 per hour) 20 Total $ 29 During April, 31,000 units were scheduled for production; however, only 26,000 units were actually produced. The following data relate to April. Actual direct-labor cost incurred was $848,000 for 53,000 actual hours of work. Actual overhead incurred totaled $843,800, of which $243,800 was variable and $600,000 was fixed. Required: Prepare two exhibits similar to Exhibit 11-6 and Exhibit 11-8 in the chapter, which show the following variances. State whether each variance is favorable or unfavorable, where appropriate. 1. Variable-overhead spending variance. 2. Variable-overhead efficiency variance. 3. Fixed-overhead budget variance. 4. Fixed-overhead volume variance.
Managerial Accounting
15th Edition
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:Carl Warren, Ph.d. Cma William B. Tayler
Chapter9: Evaluating Variances From Standard Costs
Section: Chapter Questions
Problem 10E: Ada Clothes Company produced 40,000 units during April. The Cutting Department used 12,800 direct...
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Question
Calgary Paper Company produces paper for photocopiers. The company has developed standard
Variable overhead (2 direct-labor hours @ $4.5 per hour) | $ | 9 | |
Fixed overhead (2 direct-labor hours @ $10 per hour) | 20 | ||
Total | $ | 29 | |
During April, 31,000 units were scheduled for production; however, only 26,000 units were actually produced. The following data relate to April.
- Actual direct-labor cost incurred was $848,000 for 53,000 actual hours of work.
- Actual overhead incurred totaled $843,800, of which $243,800 was variable and $600,000 was fixed.
Required:
Prepare two exhibits similar to Exhibit 11-6 and Exhibit 11-8 in the chapter, which show the following variances. State whether each variance is favorable or unfavorable, where appropriate.
1. Variable-overhead spending variance.
2. Variable-overhead efficiency variance.
3. Fixed-overhead
4. Fixed-overhead volume variance.
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