Fixed Overhead Spending and Volume Variances, Columnar and Formula Approaches Corey Company provided the following information: Standard fixed overhead rate (SFOR) per direct labor hour $10.00 Actual fixed overhead $425,000 Budgeted fixed overhead $500,000 Actual production in units 8,500 Standard hours allowed for actual units produced (SH) 42,500 Required Enter amounts as positive numbers and select Favorable (F) or Unfavorable(U). If no variance, enter $0 and select 0. 1. Using the columnar approach, calculate the fixed overhead spending and volume variances. Please use the attached picture to solve the above question. 2. Calculate the total fixed overhead variance. 3. Using the formula approach, calculate the fixed overhead spending variance.
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.
Fixed
Corey Company provided the following information:
| Standard fixed overhead rate (SFOR) per direct labor hour | $10.00 | ||
| Actual fixed overhead | $425,000 | ||
| Budgeted fixed overhead | $500,000 | ||
| Actual production in units | 8,500 | ||
| Standard hours allowed for actual units produced (SH) | 42,500 |
Required
Enter amounts as positive numbers and select Favorable (F) or Unfavorable(U). If no variance, enter $0 and select 0.
1. Using the columnar approach, calculate the fixed overhead spending and volume variances.
Please use the attached picture to solve the above question.
2. Calculate the total fixed overhead variance.
3. Using the formula approach, calculate the fixed overhead spending variance.
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