Homework Help is Here – Start Your Trial Now!
Business
Accounting
Overhead Variances, Two- And Three-Variance Analyses 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 122,000 units requiring 488,000 direct labor hours. (Practical capacity is 508,000 hours.) Annual budgeted overhead costs total $736,880, of which $541,680 is fixed overhead. A total of 119,500 units using 486,000 direct labor hours were produced during the year. Actual variable overhead costs for the ye were $240,100, and actual fixed overhead costs were $555,900. Required: 1. Compute overhead variances using a two-variance analysis. Budget Variance Volume Variance Volume Variance 22,360 X 11,100 ✓ $ 2. Compute overhead variances using a three-variance analysis. Spending Variance 45,700 X Efficiency Variance Unfavorable 800 X Unfavorable Unfavorable Unfavorable Unfavorable ✓

Overhead Variances, Two- And Three-Variance Analyses 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 122,000 units requiring 488,000 direct labor hours. (Practical capacity is 508,000 hours.) Annual budgeted overhead costs total $736,880, of which $541,680 is fixed overhead. A total of 119,500 units using 486,000 direct labor hours were produced during the year. Actual variable overhead costs for the ye were $240,100, and actual fixed overhead costs were $555,900. Required: 1. Compute overhead variances using a two-variance analysis. Budget Variance Volume Variance Volume Variance 22,360 X 11,100 ✓ $ 2. Compute overhead variances using a three-variance analysis. Spending Variance 45,700 X Efficiency Variance Unfavorable 800 X Unfavorable Unfavorable Unfavorable Unfavorable ✓

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
See similar textbooks
icon
Related questions
Topic Video
Question

A4

Overhead Variances, Two- And Three-Variance Analyses 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 122,000 units requiring 488,000 direct labor hours. (Practical capacity is 508,000 hours.) Annual budgeted overhead costs total $736,880, of which $541,680 is fixed overhead. A total of 119,500 units using 486,000 direct labor hours were produced during the year. Actual variable overhead costs for the year were $240,100, and actual fixed overhead costs were $555,900. Required: 1. Compute overhead variances using a two-variance analysis. Budget Variance Volume Variance Spending Variance Efficiency Variance Volume Variance 22,360 X $ 11,100 2. Compute overhead variances using a three-variance analysis. 45,700 X Unfavorable 800 X Unfavorable Unfavorable Unfavorable Unfavorable
Transcribed Image Text:Overhead Variances, Two- And Three-Variance Analyses 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 122,000 units requiring 488,000 direct labor hours. (Practical capacity is 508,000 hours.) Annual budgeted overhead costs total $736,880, of which $541,680 is fixed overhead. A total of 119,500 units using 486,000 direct labor hours were produced during the year. Actual variable overhead costs for the year were $240,100, and actual fixed overhead costs were $555,900. Required: 1. Compute overhead variances using a two-variance analysis. Budget Variance Volume Variance Spending Variance Efficiency Variance Volume Variance 22,360 X $ 11,100 2. Compute overhead variances using a three-variance analysis. 45,700 X Unfavorable 800 X Unfavorable Unfavorable Unfavorable Unfavorable
Expert Solution
steps

Step by step

Solved in 4 steps

SEE SOLUTIONCheck out a sample Q&A here
Blurred answer
Knowledge Booster
Performance measurements
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
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
SEE MORE TEXTBOOKS