The following standards for variable overhead have been established for a company that makes only one product Standard hours per unit of output Standard variable overhead rate 6.2 hours $13.50 per hour The following data pertain to operations for the last month: Actual hours Actual total variable overhead cost Actual output 9,700 hours $ 125,170 1,550 units Required: a. What is the variable overhead rate variance for the month? b. What is the variable overhead efficiency variance for the month? (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values.)
The following standards for variable overhead have been established for a company that makes only one product Standard hours per unit of output Standard variable overhead rate 6.2 hours $13.50 per hour The following data pertain to operations for the last month: Actual hours Actual total variable overhead cost Actual output 9,700 hours $ 125,170 1,550 units Required: a. What is the variable overhead rate variance for the month? b. What is the variable overhead efficiency variance for the month? (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values.)
Chapter8: Standard Costs And Variances
Section: Chapter Questions
Problem 9EB: Eagle Inc. uses a standard cost system. During the most recent period, the company manufactured...
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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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