Lamp Light Limited (LLL) manufactures lampshades. It applies variable overhead on the basis of direct labor hours. Information from LLL's standard cost card follows: Variable manufacturing overhead During August, LLL had the following actual results: Units produced and sold Actual variable overhead. Actual direct labor hours Standard Quantity 0.6 Variable Overhead Rate Variance Variable Overhead Efficiency Variance Variable Overhead Spending Variance 26,000 $ 9,560 16,700 Standard Rate. $0.80 Standard Unit Cost $0.48 Required: Compute LLL's variable overhead rate variance, variable overhead efficiency variance, and over- or underapplied variable overhead. Note: Do not round intermediate calculations. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance).
Lamp Light Limited (LLL) manufactures lampshades. It applies variable overhead on the basis of direct labor hours. Information from LLL's standard cost card follows: Variable manufacturing overhead During August, LLL had the following actual results: Units produced and sold Actual variable overhead. Actual direct labor hours Standard Quantity 0.6 Variable Overhead Rate Variance Variable Overhead Efficiency Variance Variable Overhead Spending Variance 26,000 $ 9,560 16,700 Standard Rate. $0.80 Standard Unit Cost $0.48 Required: Compute LLL's variable overhead rate variance, variable overhead efficiency variance, and over- or underapplied variable overhead. Note: Do not round intermediate calculations. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance).
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 help me
Transcribed Image Text:### Manufacturing Overhead Analysis for Lamp Light Limited (LLL)
Lamp Light Limited (LLL) manufactures lampshades and applies variable overhead on the basis of direct labor hours. The following information is from LLL's standard cost card:
| Standard Quantity | Standard Rate | Standard Unit Cost |
|-------------------|---------------|---------------------|
| 0.6 | $0.80 | $0.48 |
**August Actual Results:**
- Units produced and sold: 26,000
- Actual variable overhead: $9,560
- Actual direct labor hours: 16,700
**Required:**
Compute LLL’s variable overhead rate variance, variable overhead efficiency variance, and over- or underapplied variable overhead.
**Note:** Do not round intermediate calculations. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance).
| Variance Type | | Effect |
|-----------------------------------------|----|--------------|
| Variable Overhead Rate Variance | | |
| Variable Overhead Efficiency Variance | | |
| Variable Overhead Spending Variance | | |
**Explanation of Variances:**
- **Variable Overhead Rate Variance:** Measures the difference between the actual overhead rate and the standard overhead rate, multiplied by the actual hours.
- **Variable Overhead Efficiency Variance:** Measures the difference between the actual hours worked and the standard hours that should have been worked for the actual output.
- **Variable Overhead Spending Variance:** Reflects the overall difference between the actual variable overhead incurred and the estimated variable overhead for the given level of production.
By analyzing these variances, Lamp Light Limited can identify areas of inefficiency and over- or under-application of overhead, which helps in cost control and financial planning.
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 3 steps
Knowledge Booster
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.Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education