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Oerstman, Inc., uses a standard costing system and develops its overhead rates from the current annual budget. The budget is based on an expected annual output of 127,000 units requiring 508,000 direct labor hours. (Practical capacity is 528,000 hours.) Annual budgeted overhead costs total $828,040, of which $594,360 is fixed overhead. A total of 119,400 units using 506,000 direct labor hours were produced during the year. Actual variable overhead costs for the year were $260,500, and actual fixed overhead costs were $555,850. Required: 1. Compute the fixed overhbad spending and volume variances. Fixed Overhead Spending Variance

Oerstman, Inc., uses a standard costing system and develops its overhead rates from the current annual budget. The budget is based on an expected annual output of 127,000 units requiring 508,000 direct labor hours. (Practical capacity is 528,000 hours.) Annual budgeted overhead costs total $828,040, of which $594,360 is fixed overhead. A total of 119,400 units using 506,000 direct labor hours were produced during the year. Actual variable overhead costs for the year were $260,500, and actual fixed overhead costs were $555,850. Required: 1. Compute the fixed overhbad spending and volume variances. Fixed Overhead Spending Variance

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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lead Variances, Four-Variance Analysis Oerstman, Inc., uses a standard costing system and develops its overhead rates from the current annual budget. The budget is based on an expected annual output of 127,000 units requiring 508,000 direct labor hours. (Practical capacity is 528,000 hours.) Annual budgeted overhead costs total $828,040, of which $594,360 is fixed overhead. A total of 119,400 units using 506,000 direct labor hours were produced during the year. Actual variable overhead costs for the year were $260,500, and actual fixed overhead costs were $555,850. Required: 1. Compute the fixed overhad spending and volume variances. Fixed Overhead Spending Variance Fixed Overhead Volume Variance 2. Compute the variable overhead spending and efficiency variances. Do not round intermediate calculations Variable Overhead Spending Variance Variable Overhead Efficiency Variance
Transcribed Image Text:lead Variances, Four-Variance Analysis Oerstman, Inc., uses a standard costing system and develops its overhead rates from the current annual budget. The budget is based on an expected annual output of 127,000 units requiring 508,000 direct labor hours. (Practical capacity is 528,000 hours.) Annual budgeted overhead costs total $828,040, of which $594,360 is fixed overhead. A total of 119,400 units using 506,000 direct labor hours were produced during the year. Actual variable overhead costs for the year were $260,500, and actual fixed overhead costs were $555,850. Required: 1. Compute the fixed overhad spending and volume variances. Fixed Overhead Spending Variance Fixed Overhead Volume Variance 2. Compute the variable overhead spending and efficiency variances. Do not round intermediate calculations Variable Overhead Spending Variance Variable Overhead Efficiency Variance
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