Standard Direct Labor Hours Overhead Rate Variable overhead variance $ Fixed overhead variance 4.90 2.00 -At 65% of Operating Capacity. Standard Standard Actual Direct Labor Overhead Applied Overhead Hours 899,050 Overhead Variance Favorable/Unfavorable
Standard Direct Labor Hours Overhead Rate Variable overhead variance $ Fixed overhead variance 4.90 2.00 -At 65% of Operating Capacity. Standard Standard Actual Direct Labor Overhead Applied Overhead Hours 899,050 Overhead Variance Favorable/Unfavorable
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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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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![Required information
Use the following information for the Exercises below. (Algo)
[The following information applies to the questions displayed below.]
Sedona Company set the following standard costs for one unit of its product for this year.
Direct material (15 pounds @ $3.40 per pound)
Direct labor (10 hours @ $9.70 per DLH)
Variable overhead (10 hours @ $4.90 per DLH)
Fixed overhead (10 hours @ $2.00 per DLH)
Standard cost per unit
The $6.90 ($4.90 + $2.00) total overhead rate per direct labor hour (DLH) is based on a predicted activity level of 41,300
units, which is 70% of the factory's capacity of 59,000 units per month. The following monthly flexible budget information
is available.
Flexible Budget
Budgeted production (units)
Budgeted direct labor (standard hours)
Budgeted overhead
Variable overhead
Fixed overhead
Total overhead
Actual variable overhead
Actual fixed overhead
Actual total overhead
$ 51.00
97.00
49.00
20.00
$ 217.00
$ 1,816,000
899,050
$ 2,715,050
Operating Levels (% of capacity)
65%
70%
75%
38,350
383,500
$ 1,879,150
826,000
$ 2,705,150
41,300
413,000
44,250
442,500
During the current month, the company operated at 65% of capacity, direct labor of 365,000 hours were used, and the
following actual overhead costs were incurred.
$ 2,023,700
826,000
$ 2,168,250
826,000
$ 2,849,700 $ 2,994,250
Exercise 21-27A (Algo) Computing total variable and fixed overhead variances LO P5
1. Compute the total variable overhead variance and identify it as favorable or unfavorable. (Indicate the effect of the variance by
selecting favorable, unfavorable, or no variance.)
2. Compute the total fixed overhead variance and identify it as favorable or unfavorable. (Indicate the effect of the variance by
selecting favorable, unfavorable, or no variance.)](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F32c43a2c-3afb-4fa3-86aa-61c694b3c500%2Fdd7281b7-cd85-4dbe-970d-6fdbd4ad11ff%2Ftrdgfvm_processed.png&w=3840&q=75)
Transcribed Image Text:Required information
Use the following information for the Exercises below. (Algo)
[The following information applies to the questions displayed below.]
Sedona Company set the following standard costs for one unit of its product for this year.
Direct material (15 pounds @ $3.40 per pound)
Direct labor (10 hours @ $9.70 per DLH)
Variable overhead (10 hours @ $4.90 per DLH)
Fixed overhead (10 hours @ $2.00 per DLH)
Standard cost per unit
The $6.90 ($4.90 + $2.00) total overhead rate per direct labor hour (DLH) is based on a predicted activity level of 41,300
units, which is 70% of the factory's capacity of 59,000 units per month. The following monthly flexible budget information
is available.
Flexible Budget
Budgeted production (units)
Budgeted direct labor (standard hours)
Budgeted overhead
Variable overhead
Fixed overhead
Total overhead
Actual variable overhead
Actual fixed overhead
Actual total overhead
$ 51.00
97.00
49.00
20.00
$ 217.00
$ 1,816,000
899,050
$ 2,715,050
Operating Levels (% of capacity)
65%
70%
75%
38,350
383,500
$ 1,879,150
826,000
$ 2,705,150
41,300
413,000
44,250
442,500
During the current month, the company operated at 65% of capacity, direct labor of 365,000 hours were used, and the
following actual overhead costs were incurred.
$ 2,023,700
826,000
$ 2,168,250
826,000
$ 2,849,700 $ 2,994,250
Exercise 21-27A (Algo) Computing total variable and fixed overhead variances LO P5
1. Compute the total variable overhead variance and identify it as favorable or unfavorable. (Indicate the effect of the variance by
selecting favorable, unfavorable, or no variance.)
2. Compute the total fixed overhead variance and identify it as favorable or unfavorable. (Indicate the effect of the variance by
selecting favorable, unfavorable, or no variance.)
Transcribed Image Text:Standard Direct Labor Hours Overhead Rate
Variable overhead variance
Fixed overhead variance
$
4.90
2.00
--At 65% of Operating Capacity---
Standard
Standard
Direct Labor Overhead Applied
Hours
Actual
Overhead
899,050
Overhead
Variance
Favorable/Unfavorable
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