
Concept explainers
Concept Introduction:
Variable overhead cost variance:
Variable overhead cost variance can be defined as difference in the standard variable
Variable overhead cost variance is calculated as under –
Variable overhead efficiency variance:
Variable overhead efficiency variance can be defined as difference between the standard hours or standard basis of use and actual hours or actual basis of use
Variable overhead efficiency variance is calculated as under –
Fixed overhead cost variance:
Fixed overhead cost variance can be defined as difference in the standard fixed overheads and actual fixed overheads.
Fixed overhead cost variance is calculated as under –
Fixed overhead volume variance:
Fixed overhead volume variance can be defined as difference between fixed overhead for standard output and fixed overhead for actual output.
Fixed overhead volume variance is calculated as under –
To compute:
1. Variable Overhead cost variance
2. Variable overhead efficiency variance
3. Fixed Overhead Cost variance
4. Fixed overhead volume variance
Requirement 2
To explain:
Why the variances are favourable or unfavourable

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Chapter 23 Solutions
Horngren's Accounting, The Financial Chapters (11th Edition) - Standalone Book
- Bruno Manufacturing uses direct labor-hours in its predetermined overhead rate. At the beginning of the year, the total estimated manufacturing overhead was $680,000. At the end of the year, actual direct labor-hours for the year were 42,500 hours, manufacturing overhead for the year was underapplied by $25,500, and the actual manufacturing overhead was $695,000. The predetermined overhead rate for the year must have been closest to: A) $16.00 B) $15.75 C) $16.35 D) $16.94arrow_forwardWhat was manufactured overhead?arrow_forwardWhich of the following choices is the correct status of manufacturing overhead at year-end?arrow_forward
- Morris Corporation applies manufacturing overhead at the rate of $40 per machine hour. Budgeted machine hours for the current period were anticipated to be 200,000; however, higher than expected production resulted in actual machine hours worked of 225,000. Budgeted and actual manufacturing overhead figures for the year were $8,000,000 and $8,750,000, respectively. On the basis of this information, the company's year-end overhead was: A. overapplied by $250,000 B. underapplied by $250,000 C. overapplied by $750,000 D. underapplied by $750,000arrow_forwardAt the beginning of the year, manufacturing overhead for the year was estimated to be $560,000. At the end of the year, actual labor hours for the year were 35,000 hours, the actual manufacturing overhead for the year was $590,000, and the manufacturing overhead for the year was underapplied by $30,000. If the predetermined overhead rate is based on direct labor hours, then the estimated labor hours at the beginning of the year used in the predetermined overhead rate must have been ___ hours.arrow_forwardGive me Answerarrow_forward
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