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capacity for the plant is defined as 50,000 machine hours per year, which represents 25,000 units of output. Annual budgeted fixed factory overhead costs are $250,000 and the budgeted variable factory overhead cost rate is $4 per Factory overhead costs are applied on the basis of standard machine hours allowed for units produced. Budgeted an actual output for the year was 20,000 units, which took 41,000 machine hours. Actual fixed factory overhead costs for year amounted to $245,000, while the actual variable overhead cost per unit was $3.90. Based on the information provided above, what was (a) the variable overhead spending variance for the year, and (b) the van overhead efficiency variance for the year? Indicate whether each variance was favorable (F) or unfavorable (U). (Do not rour intermediate calculations. Round your final answers to the nearest whole dollar amount.) (a) Spending variance (b) Efficiency variance

capacity for the plant is defined as 50,000 machine hours per year, which represents 25,000 units of output. Annual budgeted fixed factory overhead costs are $250,000 and the budgeted variable factory overhead cost rate is $4 per Factory overhead costs are applied on the basis of standard machine hours allowed for units produced. Budgeted an actual output for the year was 20,000 units, which took 41,000 machine hours. Actual fixed factory overhead costs for year amounted to $245,000, while the actual variable overhead cost per unit was $3.90. Based on the information provided above, what was (a) the variable overhead spending variance for the year, and (b) the van overhead efficiency variance for the year? Indicate whether each variance was favorable (F) or unfavorable (U). (Do not rour intermediate calculations. Round your final answers to the nearest whole dollar amount.) (a) Spending variance (b) Efficiency variance

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Patel and Sons Incorporated uses a standard cost system to apply factory overhead costs to units produced. Practical capacity for the plant is defined as 50,000 machine hours per year, which represents 25,000 units of output. Annual budgeted fixed factory overhead costs are $250,000 and the budgeted variable factory overhead cost rate is $4 per unit. Factory overhead costs are applied on the basis of standard machine hours allowed for units produced. Budgeted and actual output for the year was 20,000 units, which took 41,000 machine hours. Actual fixed factory overhead costs for the year amounted to $245,000, while the actual variable overhead cost per unit was $3.90. Based on the information provided above, what was (a) the variable overhead spending variance for the year, and (b) the variable overhead efficiency variance for the year? Indicate whether each variance was favorable (F) or unfavorable (U). (Do not round intermediate calculations. Round your final answers to the nearest whole dollar amount.) (a) Spending variance (b) Efficiency variance
Transcribed Image Text:Patel and Sons Incorporated uses a standard cost system to apply factory overhead costs to units produced. Practical capacity for the plant is defined as 50,000 machine hours per year, which represents 25,000 units of output. Annual budgeted fixed factory overhead costs are $250,000 and the budgeted variable factory overhead cost rate is $4 per unit. Factory overhead costs are applied on the basis of standard machine hours allowed for units produced. Budgeted and actual output for the year was 20,000 units, which took 41,000 machine hours. Actual fixed factory overhead costs for the year amounted to $245,000, while the actual variable overhead cost per unit was $3.90. Based on the information provided above, what was (a) the variable overhead spending variance for the year, and (b) the variable overhead efficiency variance for the year? Indicate whether each variance was favorable (F) or unfavorable (U). (Do not round intermediate calculations. Round your final answers to the nearest whole dollar amount.) (a) Spending variance (b) Efficiency variance
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