ased on an expected annual output of 129,000 units requiring 516,000 direct labor hours. (Practical capacity is 536,000 hours.) Annual budgeted overhead costs total $861,720, of which $614,040 is fixed overhead. A total of 119,300 units using 514,000 direct labor hours were produced during the year. Actual variable overhead costs for the year were $261,300, and actual fixed overhead costs were $555,650. Required: 1. Compute the fixed overhead spending and volume variances. Fixed Overhead Spending Variance $fill in the blank 1 Fixed Overhead Volume Variance $fill in the blank 3
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.
Oerstman, Inc., uses a
Required:
1. Compute the fixed overhead spending and volume variances.
| Fixed Overhead Spending Variance | $fill in the blank 1 |
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| Fixed Overhead Volume Variance | $fill in the blank 3 |
|
2. Compute the variable overhead spending and efficiency variances. Do not round intermediate calculations
| Variable Overhead Spending Variance | $fill in the blank 5 |
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| Variable Overhead Efficiency Variance | $fill in the blank 7 |
|
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