Required: Calculate the variable overhead efficiency variance
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.
You have collected the
K
Materials 7kg at K35.00 245.00
Labour 20 hours at K12.00 240.00
Variable
Fixed overheads 20 hours at K15.00 300.00
945.00
Selling price 1,500.00
Profit 555.00
The budget was for 9,000 units of product ‘Zeus’ to be produced and sold.
Actual results for the period just ended were:
K
Sales 8,900 units 12,406,600
Production 8,900 units
Materials- purchased and used 62,450 Kg 2,183,000
Labour- paid and worked 177,450 hours 2,246,000
Variable overheads 1,435,000
Fixed overheads 2,650,000
Required:
Calculate the variable overhead efficiency variance
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