Highfill Corporation's variable overhead is applied on the basis of direct labor-hours. The standard cost card for product D80D specifies 6.7 direct labor-hours per unit of D80D. The standard variable overhead rate is $7.00 per direct labor-hour. During the most recent month, 1,100 units of product D80D were made and 7,500 direct labor-hours were worked. The actual variable overhead incurred was $57,390. Required: a. What was the variable overhead spending variance for the month? b. What was the variable overhead efficiency variance for the month? (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values.) a. Variable overhead spending variance b. Variable overhead efficiency variance
Highfill Corporation's variable overhead is applied on the basis of direct labor-hours. The standard cost card for product D80D specifies 6.7 direct labor-hours per unit of D80D. The standard variable overhead rate is $7.00 per direct labor-hour. During the most recent month, 1,100 units of product D80D were made and 7,500 direct labor-hours were worked. The actual variable overhead incurred was $57,390. Required: a. What was the variable overhead spending variance for the month? b. What was the variable overhead efficiency variance for the month? (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values.) a. Variable overhead spending variance b. Variable overhead efficiency variance
Chapter1: Financial Statements And Business Decisions
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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.
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Transcribed Image Text:Highfill Corporation's variable overhead is applied on the basis of direct labor-hours. The standard cost card for product D80D
specifies 6.7 direct labor-hours per unit of D80D. The standard variable overhead rate is $7.00 per direct labor-hour. During the most
recent month, 1,100 units of product D80D were made and 7,500 direct labor-hours were worked.
The actual variable overhead incurred was $57,390.
Required:
a. What was the variable overhead spending variance for the month?
b. What was the variable overhead efficiency variance for the month?
(Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero
variance). Input all amounts as positive values.)
a. Variable overhead spending variance
b. Variable overhead efficiency variance
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