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 0.20 Standard fixed overhead rate (per direct labor hour) $2.50 Budgeted fixed overhead $65,000 Actual fixed overhead costs $68,300 Actual hours worked 26,350 Required: a. Calculate the fixed overhead spending variance using the formula approach. b. Calculate the volume variance using the formula approach. c. Calculate the fixed overhead spending variance and volume variance using the three-pronged graphical approach. d. What if 129,600 units had actually been produced in February? What impact would that have had on the fixed overhead spending variance? On the volume variance?
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 0.20 Standard fixed overhead rate (per direct labor hour) $2.50 Budgeted fixed overhead $65,000 Actual fixed overhead costs $68,300 Actual hours worked 26,350 Required: a. Calculate the fixed overhead spending variance using the formula approach. b. Calculate the volume variance using the formula approach. c. Calculate the fixed overhead spending variance and volume variance using the three-pronged graphical approach. d. What if 129,600 units had actually been produced in February? What impact would that have had on the fixed overhead spending variance? On the volume variance?
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter9: Standard Costing: A Functional-based Control Approach
Section: Chapter Questions
Problem 3CE: Refer to Cornerstone Exercise 9.1. Guillermos Oil and Lube Company provided the following...
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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 0.20
Standard fixed overhead rate (per direct labor hour) $2.50
Budgeted fixed overhead $65,000
Actual fixed overhead costs $68,300
Actual hours worked 26,350
Required:
a. Calculate the fixed overhead spending variance using the formula approach.
b. Calculate the volume variance using the formula approach.
c. Calculate the fixed overhead spending variance and volume variance using the three-pronged graphical approach.
d. What if 129,600 units had actually been produced in February? What impact would that have had on the fixed overhead spending variance? On the volume variance?
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