Variable Overhead Spending and Efficiency Variances,Columnar and Formula ApproachesRath Company provided the following information:Standard variable overhead rate (SVOR) per direct labor hour $3.75Actual variable overhead costs $222,816Actual direct labor hours worked (AH) 57,200Actual production in units 15,000Standard hours (SH) allowed for actual units produced 60,000Required:1. Using the columnar approach, calculate the variable overhead spending and efficiencyvariances.2. Using the formula approach, calculate the variable overhead spending variance.3. Using the formula approach, calculate the variable overhead efficiency variance.4. Calculate the total variable overhead variance
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.
Variable
Columnar and Formula Approaches
Rath Company provided the following information:
Standard variable overhead rate (SVOR) per direct labor hour $3.75
Actual variable overhead costs $222,816
Actual direct labor hours worked (AH) 57,200
Actual production in units 15,000
Standard hours (SH) allowed for actual units produced 60,000
Required:
1. Using the columnar approach, calculate the variable overhead spending and efficiency
variances.
2. Using the formula approach, calculate the variable overhead spending variance.
3. Using the formula approach, calculate the variable overhead efficiency variance.
4. Calculate the total variable overhead variance
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