Required: 1. Calculate the fixed overhead spending variance using the formula approach. 4,500 v Unfavorable 2. Calculate the volume variance using the formula approach. x Unfavorable 3. What if 127,000 units had actually been produced in February? What impact would that have had? Indicate what the new variances would be below. Fixed Overhead Spending Variance Unfavorable Volume Variance Unfavorable
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.
Calculating the Fixed Overhead Spending and Volume Variances
Standish Company manufactures consumer products and provided the following information for the month of February:
![Calculating the Fixed Overhead Spending and Volume Variances
Standish Company manufactures consumer products and provided the following information for the month of February:
Units produced
131,000
Standard direct labor hours per unit
0.2
Standard fixed overhead rate (per direct labor hour)
$2.30
Budgeted fixed overhead
$64,300
Actual fixed overhead costs
$68,800
Actual hours worked
26,700
Required:
1. Calculate the fixed overhead spending variance using the formula approach.
4,500 v Unfavorable
2. Calculate the volume variance using the formula approach.
x Unfavorable
3. What if 127,000 units had actually been produced in February? What impact would that have had? Indicate what the new variances would be below.
Fixed Overhead Spending Variance
Unfavorable
Volume Variance
Unfavorable](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F8f0bf35c-eba0-4184-9b00-a519cc5d9ce1%2Fcd4b5ee5-0047-4160-83c3-6a562a011b52%2F99pmaj_processed.png&w=3840&q=75)
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