Question

Tipton company manufactures shirts. During June Tipton made 1200 shirts but had budgeted production at 1400 shirts.

Tipton gathered the following additional data:

Variable overhead cost standard	$0.50 per DLHr
Direct labor efficiency standard	2.00 DLHr per shirt
Actual amount of direct labor hours	2,520 DLHr
Actual cost of variable overhead	$1,512
Fixed overhead cost standard	$0.25 per DLHr
Budgeted fixed overhead	$700
Actual cost of fixed overhead	$750

13. Calculate the variable overhead cost variance.

Select the formula, then enter the amounts and compute the cost variance for variable overhead (VOH) and identify whether the variance is favorable (F) or unfavorable (U).

(

-

)

x

=

VOH Cost Variance

(

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)

x

=

14. Calculate the variable overhead efficiency variance.

Select the formula, then enter the amounts and compute the efficiency variance for variable overhead and identify whether the variance is favorable (F) or unfavorable (U).

(

-

)

x

=

VOH Efficiency Variance

(

-

)

x

=

15. Calculate the total variable overhead variance

The total variable overhead variance is

.

16. Calculate the fixed overhead cost variance

Select the formula, then enter the amounts and compute the cost variance for fixed overhead (FOH) and identify whether the variance is favorable (F) or unfavorable (U).

-

=

Fixed Overhead Cost Variance

-

=

17. Calculate the fixed overhead volume variance

First, select the formula, then enter the amounts and compute the fixed overhead allocated to production. (Abbreviations used: SQ = standard quantity, AO = actual output.)

	x		=	Overhead allocated to production
	x		=

Now, select the formula, then enter the amounts and compute the fixed overhead volume variance and identify whether the variance is favorable (F) or unfavorable (U).

-

=

Fixed Overhead Volume Variance

-

=

18. Calculate the total fixed overhead variance.

The total fixed overhead variance is

.

Answer 1

Answers to Question 13, 14 and 15:

Answers to Question 16, 17 and 18: