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 @ $8.00 per hour) $ 40 Fixed overhead (5 direct-labor hours @ $12.00 per hour)* Total overhead 60 $ 100 *Based on capacity of 300,000 direct-labor hours per month. The following information is available for the month of October. Variable-overhead costs were $2,340,000. Fixed-overhead costs were $3,750,000. 56,000 switches were produced, although 60,000 switches were scheduled to be produced. 275,000 direct-labor hours were worked at a total cost of $2,550,000. 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 (i.e., zero 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 @ $8.00 per hour) $ 40 Fixed overhead (5 direct-labor hours @ $12.00 per hour)* Total overhead 60 $ 100 *Based on capacity of 300,000 direct-labor hours per month. The following information is available for the month of October. Variable-overhead costs were $2,340,000. Fixed-overhead costs were $3,750,000. 56,000 switches were produced, although 60,000 switches were scheduled to be produced. 275,000 direct-labor hours were worked at a total cost of $2,550,000. 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 (i.e., zero variance).)
Chapter1: Financial Statements And Business Decisions
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Transcribed Image Text: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 @ $8.00 per hour) $ 40
Fixed overhead (5 direct-labor hours @ $12.00 per hour)*
Total overhead
$ 100
*Based on capacity of 300,000 direct-labor hours per month.
The following information is available for the month of October.
Variable-overhead costs were $2,340,000.
Fixed-overhead costs were $3,750,000.
56,000 switches were produced, although 60,000 switches were scheduled to be produced.
275,000 direct-labor hours were worked at a total cost of $2,550,000.
Required:
Compute the vari -overhead spending and efficiency variances a the fixed-overhead budget and volume variances for Octobe
(Indicate the effect of each variance by selecting "Favorable" or "Unfavorable". Select "None" and enter "0" for no effect (i.e., zero
variance).)
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