Variable overhead Fixed overhead Total manufacturing costs 70,200 Overhead controllable variance $ Overhead volume varianco 25,300 $231,775 The purchasing department buys the quantities of raw materials that are expected to be used in production each month. Raw materials inventories, therefore, can be ignored. Compute the overhead controllable variance and the overhead volume variance.
Variable overhead Fixed overhead Total manufacturing costs 70,200 Overhead controllable variance $ Overhead volume varianco 25,300 $231,775 The purchasing department buys the quantities of raw materials that are expected to be used in production each month. Raw materials inventories, therefore, can be ignored. Compute the overhead controllable variance and the overhead volume 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:Variable overhead
Fixed overhead
Total manufacturing costs
70,200
$231,775
The purchasing department buys the quantities of raw materials that are expected to be used in production each month. Raw
materials inventories, therefore, can be ignored.
Overhead controllable variance $
Overhead volume variance
25,300
Compute the overhead controllable variance and the overhead volume variance.
$
to
Transcribed Image Text:Swifty Corporation manufactures a single product. The standard cost per unit of product is shown below.
Direct materials-1 pound plastic at $7 per pound
Direct labor-1.5 hours at $12.50 per hour
Variable manufacturing overhead
Fixed manufacturing overhead
Total standard cost per unit
Direct materials (5,330 pounds)
Direct labor (7,690 hours)
$37,843
$7.00
98,432
18.75
9.00
The predetermined manufacturing overhead rate is $12 per direct labor hour ($18.00 ÷ 1.5). It was computed from a master
manufacturing overhead budget based on normal production of 7,800 direct labor hours (5,200 units) for the month. The master
budget showed total variable overhead costs of $46,800 ($6.00 per hour) and total fixed overhead costs of $46,800 ($6.00 per hour).
Actual costs for October in producing 5,200 units were as follows.
9.00
$43.75
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