Use the following information of Alfred Industries. Standard manufacturing overhead based on normal monthly volume: Fixed ($304,800 20,000 units) Variable ($100,000 20,000 units) Units actually produced in current month Actual overhead costs incurred (including $300,000 fixed) $ 15.24 Overhead spending variance Overhead volume variance 5.00 $ 20.24 18,000 units $ 383,800 Compute the overhead spending variance and the volume variance. (Indicate the effect of each variance by selecting "Favorable" or "Unfavorable". Select "None" and enter "0" for no effect (i.e., zero variance).)
Use the following information of Alfred Industries. Standard manufacturing overhead based on normal monthly volume: Fixed ($304,800 20,000 units) Variable ($100,000 20,000 units) Units actually produced in current month Actual overhead costs incurred (including $300,000 fixed) $ 15.24 Overhead spending variance Overhead volume variance 5.00 $ 20.24 18,000 units $ 383,800 Compute the overhead spending variance and the volume variance. (Indicate the effect of each variance by selecting "Favorable" or "Unfavorable". Select "None" and enter "0" for no effect (i.e., zero variance).)
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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Transcribed Image Text:Use the following information of Alfred Industries.
Standard manufacturing overhead based
on normal monthly volume:
Fixed ($304,800 20,000 units)
Variable ($100,000 20,000 units)
Units actually produced in current month
Actual overhead costs incurred (including
$300,000 fixed)
$ 15.24
Overhead spending variance
Overhead volume variance
5.00
$
20.24
18,000 units
$ 383,800
Compute the overhead spending variance and the volume variance. (Indicate the
effect of each variance by selecting "Favorable" or "Unfavorable". Select "None" and
enter "0" for no effect (i.e., zero variance).)
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