Fixed Overhead Variances Rostand Inc. operates a delivery service for over 70 restaurants. The corporation has a fleet of vehicles and has invested in a sophisticated, computerized communications system to coordinate its deliveries. Rostand has gathered the following actual data on last year’s delivery operations: Deliveries made 38,600 Direct labor 31,000 direct labor hours @ $14.00 Actual variable overhead $157,700 Rostand employs a standard costing system. During the year, a variable overhead rate of $5.10 per hour was used. The labor standard requires 0.80 hour per delivery. Assume that the actual fixed overhead was $403,400. Budgeted fixed overhead was $400,000, based on practical capacity of 32,000 direct labor hours. Required: 1. Calculate the standard fixed overhead rate based on budgeted fixed overhead and practical capacity. $fill in the blank 1 2. Compute the fixed overhead spending and volume variances. Enter amounts as positive numbers and select Favorable or Unfavorable. Spending variance Unfavorable Volume variance Unfavorable
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
Rostand Inc. operates a delivery service for over 70 restaurants. The corporation has a fleet of vehicles and has invested in a sophisticated, computerized communications system to coordinate its deliveries. Rostand has gathered the following actual data on last year’s delivery operations:
| Deliveries made | 38,600 | ||
| Direct labor | 31,000 | direct labor hours @ $14.00 | |
| Actual variable overhead | $157,700 |
Rostand employs a
Assume that the actual fixed overhead was $403,400. Budgeted fixed overhead was $400,000, based on practical capacity of 32,000 direct labor hours.
Required:
1. Calculate the standard fixed overhead rate based on budgeted fixed overhead and practical capacity.
$fill in the blank 1
2. Compute the fixed overhead spending and volume variances. Enter amounts as positive numbers and select Favorable or Unfavorable.
| Spending variance | Unfavorable | ||
| Volume variance | Unfavorable |
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