In October, Blue Spruce Inc. reports 44,400 actual direct labor hours and incurs $218,000 of manufacturing overhead costs. Standard hours allowed for the month's production is 45,200 hours. Blue Spruce's predetermined overhead rate is $5.00 per direct labor hour. Compute the total manufacturing overhead variance. Identify whether each variance is favorable or unfavorable. Total manufacturing overhead variance S Not Applicable Unfavorable Favorable
In October, Blue Spruce Inc. reports 44,400 actual direct labor hours and incurs $218,000 of manufacturing overhead costs. Standard hours allowed for the month's production is 45,200 hours. Blue Spruce's predetermined overhead rate is $5.00 per direct labor hour. Compute the total manufacturing overhead variance. Identify whether each variance is favorable or unfavorable. Total manufacturing overhead variance S Not Applicable Unfavorable Favorable
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:In October, Blue Spruce Inc. reports 44,400 actual direct labor hours and incurs $218,000 of manufacturing overhead costs. Standard
hours allowed for the month's production is 45,200 hours. Blue Spruce's predetermined overhead rate is $5.00 per direct labor hour.
Compute the total manufacturing overhead variance. Identify whether each variance is favorable or unfavorable.
Total manufacturing overhead variance $
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Not Applicable
Unfavorable
Favorable
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