Wharton Tooling uses a standard cost system to account for the costs of its one product Standard labor input is 14 hours per unit. Th standard variable overhead rate is $9.00 per direct labor hour, and fixed overhead is budgeted at $150 per unit, based on budgeted production of 650 units. During July, Wharton Tooling produced 600 units. Payroll totaled $112,930 for 8,770 hours worked. Overhe incurred was $78,053 variable and $98,750 fixed. Required: a. Calculate the variable overhead rate variance. Note: Indicate the effect of variance by selecting "Favorable", "Unfavorable", or "None" for no effect (i.e., zero variance). b. Calculate the variable overhead efficiency variance. Note: Indicate the effect of variance by selecting "Favorable". "Unfavorable", or "None" for no effect (i.e., zero variance). c. Calculate the fixed overhead spending variance. Note: Indicate the effect of variance by selecting "Favorable", "Unfavorable", or "None" for no effect (i.e., zero variance). a. Rate Variance b. Efficiency Variance c. Spending Variance
Wharton Tooling uses a standard cost system to account for the costs of its one product Standard labor input is 14 hours per unit. Th standard variable overhead rate is $9.00 per direct labor hour, and fixed overhead is budgeted at $150 per unit, based on budgeted production of 650 units. During July, Wharton Tooling produced 600 units. Payroll totaled $112,930 for 8,770 hours worked. Overhe incurred was $78,053 variable and $98,750 fixed. Required: a. Calculate the variable overhead rate variance. Note: Indicate the effect of variance by selecting "Favorable", "Unfavorable", or "None" for no effect (i.e., zero variance). b. Calculate the variable overhead efficiency variance. Note: Indicate the effect of variance by selecting "Favorable". "Unfavorable", or "None" for no effect (i.e., zero variance). c. Calculate the fixed overhead spending variance. Note: Indicate the effect of variance by selecting "Favorable", "Unfavorable", or "None" for no effect (i.e., zero variance). a. Rate Variance b. Efficiency Variance c. Spending 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:Wharton Tooling uses a standard cost system to account for the costs of its one product Standard labor input is 14 hours per unit. The
standard variable overhead rate is $9.00 per direct labor hour, and fixed overhead is budgeted at $150 per unit, based on budgeted
production of 650 units. During July, Wharton Tooling produced 600 units. Payroll totaled $112,930 for 8,770 hours worked. Overhead
incurred was $78,053 variable and $98,750 fixed.
Required:
a. Calculate the variable overhead rate variance.
Note: Indicate the effect of variance by selecting "Favorable", "Unfavorable", or "None" for no effect (i.e., zero variance).
b. Calculate the variable overhead efficiency variance.
Note: Indicate the effect of variance by selecting "Favorable". "Unfavorable", or "None" for no effect (i.e., zero variance).
c. Calculate the fixed overhead spending variance.
Note: Indicate the effect of variance by selecting "Favorable", "Unfavorable", or "None" for no effect (i.e., zero variance).
a. Rate Variance
b. Efficiency Variance
c. Spending Variance
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