Sedona Company set the following standard costs for one unit of its product for this year. Direct material (30 pounds @ $2.00 per pound) Direct labor (20 hours @ $4.50 per DLH) variable overhead (20 hours @ $2.90 per DLH) Fixed overhead (20 hours @ $1.20 per DLH) standard cost per unit $ 60.00 90.00 58.00 24.00 $ 232.00 The $4.10 ($2.90 +$1.20) total overhead rate per direct labor hour (DLH) is based on a predicted activity level of 40,950 units, which is 65% of the factory's capacity of 63,000 units per month. The following monthly flexible budget information Is available. Operating Levels (% of capacity) Flexible Budget Budgeted production (units) Budgeted direct labor (standard hours) Budgeted overhead Variable overhead Fixed overhead Total overhead 60% 37,800 756,000 $ 2,192,400 982,800 $ 3,175,200 65% 40,950 819,000 $ 2,375,100 982,800 $ 3,357,900 70% 44,100 882,000 $ 2,557,800 982,800 $ 3,540,600 During the current month, the company operated at 60% of capacity, direct labor of 726,000 hours were used, and the following actual overhead costs were incurred. Actual variable overhead Actual fixed overhead Actual total overhead $ 2,120,000 1,065,000 $ 3,185,000 Exercise 23-28A (Algo) Detailed overhead variances LO P5 AH Actual Hours SH = Standard Hours AVR Actual Variable Rate SVR Standard Variable Rate 1. Compute the variable overhead spending and efficiency variances. 2. Compute the fixed overhead spending and volume variances. 3. Compute the controllable variance. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Compute the variable overhead spending and efficiency u
Sedona Company set the following standard costs for one unit of its product for this year. Direct material (30 pounds @ $2.00 per pound) Direct labor (20 hours @ $4.50 per DLH) variable overhead (20 hours @ $2.90 per DLH) Fixed overhead (20 hours @ $1.20 per DLH) standard cost per unit $ 60.00 90.00 58.00 24.00 $ 232.00 The $4.10 ($2.90 +$1.20) total overhead rate per direct labor hour (DLH) is based on a predicted activity level of 40,950 units, which is 65% of the factory's capacity of 63,000 units per month. The following monthly flexible budget information Is available. Operating Levels (% of capacity) Flexible Budget Budgeted production (units) Budgeted direct labor (standard hours) Budgeted overhead Variable overhead Fixed overhead Total overhead 60% 37,800 756,000 $ 2,192,400 982,800 $ 3,175,200 65% 40,950 819,000 $ 2,375,100 982,800 $ 3,357,900 70% 44,100 882,000 $ 2,557,800 982,800 $ 3,540,600 During the current month, the company operated at 60% of capacity, direct labor of 726,000 hours were used, and the following actual overhead costs were incurred. Actual variable overhead Actual fixed overhead Actual total overhead $ 2,120,000 1,065,000 $ 3,185,000 Exercise 23-28A (Algo) Detailed overhead variances LO P5 AH Actual Hours SH = Standard Hours AVR Actual Variable Rate SVR Standard Variable Rate 1. Compute the variable overhead spending and efficiency variances. 2. Compute the fixed overhead spending and volume variances. 3. Compute the controllable variance. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Compute the variable overhead spending and efficiency u
Chapter1: Financial Statements And Business Decisions
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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.
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Transcribed Image Text:Sedona Company set the following standard costs for one unit of its product for this year.
Direct material (30 pounds @ $2.00 per pound)
Direct labor (20 hours @ $4.50 per DLH)
variable overhead (20 hours @ $2.90 per DLH)
Fixed overhead (20 hours @ $1.20 per DLH)
standard cost per unit
$ 60.00
90.00
58.00
24.00
$ 232.00
The $4.10 ($2.90 +$1.20) total overhead rate per direct labor hour (DLH) is based on a predicted activity level of 40,950
units, which is 65% of the factory's capacity of 63,000 units per month. The following monthly flexible budget information
Is available.
Operating Levels (% of capacity)
Flexible Budget
Budgeted production (units)
Budgeted direct labor (standard hours)
Budgeted overhead
Variable overhead
Fixed overhead
Total overhead
60%
37,800
756,000
$ 2,192,400
982,800
$ 3,175,200
65%
40,950
819,000
$ 2,375,100
982,800
$ 3,357,900
70%
44,100
882,000
$ 2,557,800
982,800
$ 3,540,600
During the current month, the company operated at 60% of capacity, direct labor of 726,000 hours were used, and the
following actual overhead costs were incurred.
Actual variable overhead
Actual fixed overhead
Actual total overhead
$ 2,120,000
1,065,000
$ 3,185,000
Exercise 23-28A (Algo) Detailed overhead variances LO P5
AH Actual Hours
SH
=
Standard Hours
AVR Actual Variable Rate
SVR
Standard Variable Rate
1. Compute the variable overhead spending and efficiency variances.
2. Compute the fixed overhead spending and volume variances.
3. Compute the controllable variance.
Complete this question by entering your answers in the tabs below.
Required 1
Required 2
Required 3
Compute the variable overhead spending and efficiency u
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VIEWStep 3: Requirement 2- Calculation of fixed overhead spending and volume variances:
VIEWStep 4: Requirement 3- Calculation of controllable variance:
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