Requirements 1. Compute the overhead variances for the year: variable overhead cost variance, variable overhead efficiency variance, fixed overhead cost variance, and fixed overhead volume variance. 2. Explain why the variances are favorable or unfavorable.
Requirements 1. Compute the overhead variances for the year: variable overhead cost variance, variable overhead efficiency variance, fixed overhead cost variance, and fixed overhead volume variance. 2. Explain why the variances are favorable or unfavorable.
Chapter5: Process Costing
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Problem 2PB: The following product costs are available for Kellee Company on the production of eyeglass frames:...
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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.
Topic Video
Question
![Data table
Static budget variable overhead
$2,300
Static budget fixed overhead
$23,000
Static budget direct labor hours
575 hours
Static budget number of units
23,000 units
Standard direct labor hours
0.025 hours per fender
Print
Done
Requirements
1. Compute the overhead variances for the year: variable overhead cost
variance, variable overhead efficiency variance, fixed overhead cost variance,
and fixed overhead volume variance.
2. Explain why the variances are favorable or unfavorable.
Print
Done](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fc172220c-b8c6-4fe6-be57-f2666808bc01%2F68eaf0c9-a188-4935-a222-f4898c361248%2Fyhg1v2e_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Data table
Static budget variable overhead
$2,300
Static budget fixed overhead
$23,000
Static budget direct labor hours
575 hours
Static budget number of units
23,000 units
Standard direct labor hours
0.025 hours per fender
Print
Done
Requirements
1. Compute the overhead variances for the year: variable overhead cost
variance, variable overhead efficiency variance, fixed overhead cost variance,
and fixed overhead volume variance.
2. Explain why the variances are favorable or unfavorable.
Print
Done
![Quality Fender uses a standard cost system and provide the following information:
m (Click the ioon to view the information.)
Quality Fender allocates manufacturing overhead to production based on standard direct labor hours. Quality Fender reported the folowing actual resuits for 2024:
actual number of fenders produced, 20,000; actual variable overhead, $5,300; actual fixed overhead, $34,000, actual direct labor hours, 360.
Read the requirements
Requirement 1. Compute the overhead variances for the year. variable overhead cost variance, variable overhead efficiency variance, fixed overthead cost variance,
and fixed overhead volume variance.
Begin with the variable overhead cost and efficiency variances. Select the required formulas, compute the variable overhead cost and efficiency variances, and identit
whether each variance is favorable (F) or unfavorable (U). (You may need to simply the formula based on the data provided. Abbreviations used: AC = actual cost AC
= actual quantity, FOH = fxed overhead; SC standard cost SQ = standard quantity, VOH = variable overhead.)
Formula
Variance
VOH cost variance
VOH efficiency variance](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fc172220c-b8c6-4fe6-be57-f2666808bc01%2F68eaf0c9-a188-4935-a222-f4898c361248%2Frlzcmg6_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Quality Fender uses a standard cost system and provide the following information:
m (Click the ioon to view the information.)
Quality Fender allocates manufacturing overhead to production based on standard direct labor hours. Quality Fender reported the folowing actual resuits for 2024:
actual number of fenders produced, 20,000; actual variable overhead, $5,300; actual fixed overhead, $34,000, actual direct labor hours, 360.
Read the requirements
Requirement 1. Compute the overhead variances for the year. variable overhead cost variance, variable overhead efficiency variance, fixed overthead cost variance,
and fixed overhead volume variance.
Begin with the variable overhead cost and efficiency variances. Select the required formulas, compute the variable overhead cost and efficiency variances, and identit
whether each variance is favorable (F) or unfavorable (U). (You may need to simply the formula based on the data provided. Abbreviations used: AC = actual cost AC
= actual quantity, FOH = fxed overhead; SC standard cost SQ = standard quantity, VOH = variable overhead.)
Formula
Variance
VOH cost variance
VOH efficiency variance
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