Montoursville Control Company, which manufactures electrical switches, uses a standard-costing system. The standard production overhead costs per switch are based on direct-labor hours and are as follows: Variable overhead (5 direct-labor hours @ $13.00 per hour) Fixed overhead (5 direct-labor hours @ $19.00 per hour) Total overhead *Based on capacity of 303,500 direct-labor hours per month. The following information is available for the month of October $65 95 $ 160 • Variable overhead costs were $4,380,000. • Fixed overhead costs were $6,675,000. . 57,700 switches were produced, although 60,700 switches were scheduled to be produced. . 282,000 direct-labor hours were worked at a total cost of $4,525,000. Required: Compute the variable-overhead spending and efficiency variances and the fixed-overhead budget and volume variances for October. (Indicate the effect of each variance by selecting "Favorable" or "Unfavorable". Select "None" and enter "0" for no effect (.e., zero variance).) Variable-overhead spending variance Variable-overhead efficiency variance Fixed-overhead budget variance Fixed-overhead volume variance
Montoursville Control Company, which manufactures electrical switches, uses a standard-costing system. The standard production overhead costs per switch are based on direct-labor hours and are as follows: Variable overhead (5 direct-labor hours @ $13.00 per hour) Fixed overhead (5 direct-labor hours @ $19.00 per hour) Total overhead *Based on capacity of 303,500 direct-labor hours per month. The following information is available for the month of October $65 95 $ 160 • Variable overhead costs were $4,380,000. • Fixed overhead costs were $6,675,000. . 57,700 switches were produced, although 60,700 switches were scheduled to be produced. . 282,000 direct-labor hours were worked at a total cost of $4,525,000. Required: Compute the variable-overhead spending and efficiency variances and the fixed-overhead budget and volume variances for October. (Indicate the effect of each variance by selecting "Favorable" or "Unfavorable". Select "None" and enter "0" for no effect (.e., zero variance).) Variable-overhead spending variance Variable-overhead efficiency variance Fixed-overhead budget variance Fixed-overhead volume 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:Exercise 11-32 Overhead Variances (LO 11-5)
Montoursville Control Company, which manufactures electrical switches, uses a standard-costing system. The standard production
overhead costs per switch are based on direct-labor hours and are as follows:
Variable overhead (5 direct-labor hours @ $13.00 per hour)
Fixed overhead (5 direct-labor hours @ $19.00 per hour)
Total overhead
*Based on capacity of 303,500 direct-labor hours per month.
The following information is available for the month of October.
$65
95
$ 160
• Variable overhead costs were $4,380,000.
• Fixed overhead costs were $6,675,000.
. 57,700 switches were produced, although 60,700 switches were scheduled to be produced.
. 282,000 direct-labor hours were worked at a total cost of $4,525,000.
Required:
Compute the variable-overhead spending and efficiency variances and the fixed-overhead budget and volume variances for October.
(Indicate the effect of each variance by selecting "Favorable" or "Unfavorable". Select "None" and enter "0" for no effect (l.e., zero
variance).)
Variable-overhead spending variance
Variable-overhead efficiency variance
Fixed-overhead budget variance
Fixed-overhead volume variance
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