[The following information applies to the questions displayed below.] Patel and Sons Inc. uses a standard cost system to apply factory overhead costs to units produced. Practical capacity for the plant is defined as 53,700 machine hours per year, which represents 26,850 units of output. Annual budgeted fixed factory overhead costs are $268,500 and the budgeted variable factory overhead cost rate is $3.20 per unit. Factory overhead costs are applied on the basis of standard machine hours allowed for units produced. Budgeted and actual output for the year was 20,700 units, which took 42,700 machine hours. Actual fixed factory overhead costs for the year amounted to $259,300 while the actual variable overhead cost per unit was $3.10. Based on the information provided above, what was (a) the variable overhead spending variance for the year, and (b) the variable overhead efficiency variance for the year? Indicate whether each variance was favorable (F) or unfavorable (U). (Do not round intermediate calculations. Round your final answers to the nearest whole dollar amount.) (a) Spending variance (b) Efficiency variance $ 4
[The following information applies to the questions displayed below.] Patel and Sons Inc. uses a standard cost system to apply factory overhead costs to units produced. Practical capacity for the plant is defined as 53,700 machine hours per year, which represents 26,850 units of output. Annual budgeted fixed factory overhead costs are $268,500 and the budgeted variable factory overhead cost rate is $3.20 per unit. Factory overhead costs are applied on the basis of standard machine hours allowed for units produced. Budgeted and actual output for the year was 20,700 units, which took 42,700 machine hours. Actual fixed factory overhead costs for the year amounted to $259,300 while the actual variable overhead cost per unit was $3.10. Based on the information provided above, what was (a) the variable overhead spending variance for the year, and (b) the variable overhead efficiency variance for the year? Indicate whether each variance was favorable (F) or unfavorable (U). (Do not round intermediate calculations. Round your final answers to the nearest whole dollar amount.) (a) Spending variance (b) Efficiency variance $ 4
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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![[The following information applies to the questions displayed
below.]
Patel and Sons Inc. uses a standard cost system to apply factory
overhead costs to units produced. Practical capacity for the
plant is defined as 53,700 machine hours per year, which
represents 26,850 units of output. Annual budgeted fixed
factory overhead costs are $268,500 and the budgeted
variable factory overhead cost rate is $3.20 per unit. Factory
overhead costs are applied on the basis of standard machine
hours allowed for units produced. Budgeted and actual output
for the year was 20,700 units, which took 42,700 machine
hours. Actual fixed factory overhead costs for the year
amounted to $259,300 while the actual variable overhead cost
per unit was $3.10.
Based on the information provided above, what was (a) the variable overhead
spending variance for the year, and (b) the variable overhead efficiency variance
for the year? Indicate whether each variance was favorable (F) or unfavorable
(U). (Do not round intermediate calculations. Round your final answers to the
nearest whole dollar amount.)
(a) Spending variance
(b) Efficiency variance
$
4](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F6b56792a-d336-4c40-b8c3-1072ca5ed4f4%2F64fea091-1c1c-465a-9e1d-875b89880bda%2Fdoic14q_processed.jpeg&w=3840&q=75)
Transcribed Image Text:[The following information applies to the questions displayed
below.]
Patel and Sons Inc. uses a standard cost system to apply factory
overhead costs to units produced. Practical capacity for the
plant is defined as 53,700 machine hours per year, which
represents 26,850 units of output. Annual budgeted fixed
factory overhead costs are $268,500 and the budgeted
variable factory overhead cost rate is $3.20 per unit. Factory
overhead costs are applied on the basis of standard machine
hours allowed for units produced. Budgeted and actual output
for the year was 20,700 units, which took 42,700 machine
hours. Actual fixed factory overhead costs for the year
amounted to $259,300 while the actual variable overhead cost
per unit was $3.10.
Based on the information provided above, what was (a) the variable overhead
spending variance for the year, and (b) the variable overhead efficiency variance
for the year? Indicate whether each variance was favorable (F) or unfavorable
(U). (Do not round intermediate calculations. Round your final answers to the
nearest whole dollar amount.)
(a) Spending variance
(b) Efficiency variance
$
4
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