Norris Company produces telephones. To help control costs, Norris employs a standard costing system and uses a flexible budget to predict overhead costs at various levels of activity. For the most recent year, Norris used a standard overhead rate of P18 per direct labor hour. The rate was computed using practical activity. Budgeted overhead costs are P792,000 for 36,000 direct labor hours and P1,080,000 for 60,000 direct labor hours. During the past year, Norris generated the following data: Actual production: 100,000 units Fixed overhead volume variance: P36,000 U Determine variable overhead efficiency variance: P24,000 F Actual fixed overhead costs: P380,000 Actual variable overhead costs: P620,000 REQUIRED: Calculate the fixed overhead rate: Determine the fixed overhead spending variance. Determine the variable overhead spending variance. Determine the standard hours allowed per unit of product. Assuming the standard labor rate is P13 per hour, compute the labor efficiency variance.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
icon
Related questions
Topic Video
Question
100%

Norris Company produces telephones. To help control costs, Norris employs a standard costing system and uses a flexible budget to predict overhead costs at various levels of activity. For the most recent year, Norris used a standard overhead rate of P18 per direct labor hour. The rate was computed using practical activity. Budgeted overhead costs are P792,000 for 36,000 direct labor hours and P1,080,000 for 60,000 direct labor hours. During the past year, Norris generated the following data:

  1. Actual production: 100,000 units

  2. Fixed overhead volume variance: P36,000 U

  3. Determine variable overhead efficiency variance: P24,000 F

  4. Actual fixed overhead costs: P380,000

  5. Actual variable overhead costs: P620,000

REQUIRED:

  1. Calculate the fixed overhead rate:

  2. Determine the fixed overhead spending variance.

  3. Determine the variable overhead spending variance.

  4. Determine the standard hours allowed per unit of product.

  5. Assuming the standard labor rate is P13 per hour, compute the labor efficiency variance.

Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 5 steps

Blurred answer
Knowledge Booster
Performance measurements
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
Similar questions
  • SEE MORE QUESTIONS
Recommended textbooks for you
FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
Accounting
ISBN:
9781259964947
Author:
Libby
Publisher:
MCG
Accounting
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education