Great Fender uses a standard cost system and provide the following information: (Click the icon to view the information.) Great Fender allocates manufacturing overhead to production based on standard direct labor hours. Great Fender reported the following actual results for 2024: actual number of fenders produced, 20,000; actual variable overhead, $5,250; actual fixed overhead, $30,000; actual direct labor hours, 400. Read the requirements. Requirement 1. Compute the overhead variances for the year: variable overhead cost variance, variable overhead efficiency variance, fixed overhead cost variance, and fixed overhead volume variance. Begin with the variable overhead cost and efficiency variances. Select the required formulas, compute the variable overhead cost and efficiency variances, and identify whether each variance is favorable (F) or unfavorable (U). (You may need to simply the formula based on the data provided. Abbreviations used: AC = actual cost; AQ = actual quantity; FOH = fixed overhead; SC = standard cost; SQ = standard quantity; VOH = variable overhead.) Variance VOH cost variance VOH efficiency variance = Requirements Formula 1. Compute the overhead variances for the year: variable overhead cost variance, variable overhead efficiency variance, fixed overhead cost variance, and fixed overhead volume variance. 2. Explain why the variances are favorable or unfavorable. Print = Done
Great Fender uses a standard cost system and provide the following information: (Click the icon to view the information.) Great Fender allocates manufacturing overhead to production based on standard direct labor hours. Great Fender reported the following actual results for 2024: actual number of fenders produced, 20,000; actual variable overhead, $5,250; actual fixed overhead, $30,000; actual direct labor hours, 400. Read the requirements. Requirement 1. Compute the overhead variances for the year: variable overhead cost variance, variable overhead efficiency variance, fixed overhead cost variance, and fixed overhead volume variance. Begin with the variable overhead cost and efficiency variances. Select the required formulas, compute the variable overhead cost and efficiency variances, and identify whether each variance is favorable (F) or unfavorable (U). (You may need to simply the formula based on the data provided. Abbreviations used: AC = actual cost; AQ = actual quantity; FOH = fixed overhead; SC = standard cost; SQ = standard quantity; VOH = variable overhead.) Variance VOH cost variance VOH efficiency variance = Requirements Formula 1. Compute the overhead variances for the year: variable overhead cost variance, variable overhead efficiency variance, fixed overhead cost variance, and fixed overhead volume variance. 2. Explain why the variances are favorable or unfavorable. Print = Done
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Concept explainers
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.
Topic Video
Question
Please do not give image format
Transcribed Image Text:Static budget variable overhead
Static budget fixed overhead
Static budget direct labor hours
Static budget number of units
Standard direct labor hours
$2,300
$23,000
575 hours
23,000 units
0.025 hours per fender
Transcribed Image Text:Great Fender uses a standard cost system and provide the following information:
(Click the icon to view the information.)
Great Fender allocates manufacturing overhead to production based on standard direct labor hours. Great Fender reported the following actual results for 2024: actual
number of fenders produced, 20,000; actual variable overhead, $5,250; actual fixed overhead, $30,000; actual direct labor hours, 400.
Read the requirements.
Requirement 1. Compute the overhead variances for the year: variable overhead cost variance, variable overhead efficiency variance, fixed overhead cost variance,
and fixed overhead volume variance.
Begin with the variable overhead cost and efficiency variances. Select the required formulas, compute the variable overhead cost and efficiency variances, and identify
whether each variance is favorable (F) or unfavorable (U). (You may need to simply the formula based on the data provided. Abbreviations used: AC = actual cost; AQ
= actual quantity; FOH = fixed overhead; SC = standard cost; SQ = standard quantity; VOH = variable overhead.)
Variance
VOH cost variance
VOH efficiency variance
=
=
Requirements
Formula
1. Compute the overhead variances for the year: variable overhead cost
variance, variable overhead efficiency variance, fixed overhead cost variance,
and fixed overhead volume variance.
2. Explain why the variances are favorable or unfavorable.
Print
Done
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