Zeke's Bikes uses a standard cost system and provides the following information: Standards: Static budget variable overhead $5,040.00. Static budget fixed overhead $20,900.00. Static budget direct labor hours 400 hours. Static budget number of units 25,600 units. Static budget direct labor hours 0.035 hours per unit. Actual: Number of units produced 25,000. Actual variable overhead $5,220.00 Actual fixed overhead $23,600.00. Actual direct labor hours 520. (Round your answers to two decimal places when needed and use rounded answers for all future calculations). 1. Compute the variable and fixed overhead allocation rates. Budgeted VOH ? Budgeted allocation base = Standard VOH allocation rate = Budgeted FOH ? Budgeted allocation base = Standard FOH allocation rate = 2. Calculate the variable overhead cost and efficiency variances. (AC ? SC) ? AQ = Variable OH Cost Variance Favorable or Unfavorable = (AQ ? SQ) ? SC = Variable Overhead Efficiency Variance Favorable or Unfavorable = 3. Calculate the variable overhead cost variance. Act. FOH ? Budget FOH = Fixed OH Cost Variance Favorable or Unfavorable =
Zeke's Bikes uses a standard cost system and provides the following information: Standards: Static budget variable overhead $5,040.00. Static budget fixed overhead $20,900.00. Static budget direct labor hours 400 hours. Static budget number of units 25,600 units. Static budget direct labor hours 0.035 hours per unit. Actual: Number of units produced 25,000. Actual variable overhead $5,220.00 Actual fixed overhead $23,600.00. Actual direct labor hours 520. (Round your answers to two decimal places when needed and use rounded answers for all future calculations). 1. Compute the variable and fixed overhead allocation rates. Budgeted VOH ? Budgeted allocation base = Standard VOH allocation rate = Budgeted FOH ? Budgeted allocation base = Standard FOH allocation rate = 2. Calculate the variable overhead cost and efficiency variances. (AC ? SC) ? AQ = Variable OH Cost Variance Favorable or Unfavorable = (AQ ? SQ) ? SC = Variable Overhead Efficiency Variance Favorable or Unfavorable = 3. Calculate the variable overhead cost variance. Act. FOH ? Budget FOH = Fixed OH Cost Variance Favorable or Unfavorable =
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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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Question
Zeke's Bikes uses a standard cost system and provides the following information:
Standards:
| Static budget variable |
|---|
| Static budget fixed overhead $20,900.00. |
| Static budget direct labor hours 400 hours. |
| Static budget number of units 25,600 units. |
| Static budget direct labor hours 0.035 hours per unit. |
Actual:
| Number of units produced 25,000. |
|---|
| Actual variable overhead $5,220.00 |
| Actual fixed overhead $23,600.00. |
| Actual direct labor hours 520. |
(Round your answers to two decimal places when needed and use rounded answers for all future calculations).
1. Compute the variable and fixed overhead allocation rates.
| Budgeted VOH | ? | Budgeted allocation base | = | Standard VOH allocation rate |
|---|---|---|---|---|
| = |
| Budgeted FOH | ? | Budgeted allocation base | = | Standard FOH allocation rate |
|---|---|---|---|---|
| = |
2. Calculate the variable overhead cost and efficiency variances.
| (AC | ? | SC) | ? | AQ | = | Variable OH Cost Variance | Favorable or Unfavorable |
|---|---|---|---|---|---|---|---|
| = |
| (AQ | ? | SQ) | ? | SC | = | Variable Overhead Efficiency Variance | Favorable or Unfavorable |
|---|---|---|---|---|---|---|---|
| = |
3. Calculate the variable overhead cost variance.
| Act. FOH | ? | Budget FOH | = | Fixed OH Cost Variance | Favorable or Unfavorable |
|---|---|---|---|---|---|
| = |
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