Krueger Corporation in Washington, D.C., U.S., recently implemented a standard cost system. The company’s cost accountant has gathered the following information needed to perform a variance analysis at the end of the month:   Standard Cost Information   Direct materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $5 per pound Quantity allowed per unit . . . . . . . . . . . . . . . . . . . . . . . . . . . . .100 pounds per unit Direct labor rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $20.00 per hour Hours allowed per unit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 hours per unit Fixed overhead budgeted . . . . . . . . . . . . . . . . . . . . . . . . $12,000 per month Normal level of production . . . . . . . . . . . . . . . . . . . . . . . . . . 1,200 units Variable overhead application rate . . . . . . . . . . . . . . . . . . . $ 2.00 per unit Fixed overhead application rate ($12,000 _ 1,200 units) . . . 10.00 per unit Total overhead application rate. . . . . . . . . . . . . . . . . . . . . . $12.00 per unit   Actual Cost Information   Cost of materials purchased and used . . . . . . . . . . . . . . . . . . . $468,000 Pounds of materials purchased and used . . . . . . . . . . . . . . . . . .104,000 pounds Cost of direct labor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $46,480 Hours of direct labor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,240 hours Cost of variable overhead . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$2,352 Cost of fixed overhead . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$12,850 Volume of production . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1,000 units Instructions Compute the overhead spending variance.   This question has been answered 4 times in the Q&A, but for all four of them the results are different. So now I am very confused, because I don't know which answer is correct.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
icon
Related questions
Question
  1. Krueger Corporation in Washington, D.C., U.S., recently implemented a standard cost system. The company’s cost accountant has gathered the following information needed to perform a variance analysis at the end of the month:

 

Standard Cost Information

 

Direct materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $5 per pound

Quantity allowed per unit . . . . . . . . . . . . . . . . . . . . . . . . . . . . .100 pounds per unit

Direct labor rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $20.00 per hour

Hours allowed per unit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 hours per unit

Fixed overhead budgeted . . . . . . . . . . . . . . . . . . . . . . . . $12,000 per month

Normal level of production . . . . . . . . . . . . . . . . . . . . . . . . . . 1,200 units

Variable overhead application rate . . . . . . . . . . . . . . . . . . . $ 2.00 per unit

Fixed overhead application rate ($12,000 _ 1,200 units) . . . 10.00 per unit

Total overhead application rate. . . . . . . . . . . . . . . . . . . . . . $12.00 per unit

 

Actual Cost Information

 

Cost of materials purchased and used . . . . . . . . . . . . . . . . . . . $468,000

Pounds of materials purchased and used . . . . . . . . . . . . . . . . . .104,000 pounds

Cost of direct labor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $46,480

Hours of direct labor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,240 hours

Cost of variable overhead . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$2,352

Cost of fixed overhead . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$12,850

Volume of production . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1,000 units

Instructions

Compute the overhead spending variance.

 

This question has been answered 4 times in the Q&A, but for all four of them the results are different. So now I am very confused, because I don't know which answer is correct.

Expert Solution
steps

Step by step

Solved in 3 steps

Blurred answer
Knowledge Booster
Risk Analysis
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
Similar questions
  • SEE MORE QUESTIONS
Recommended textbooks for you
FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
Accounting
ISBN:
9781259964947
Author:
Libby
Publisher:
MCG
Accounting
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education