Question

The following selected information was extracted from the accounting records of Comprehensive Technologies, Inc.:
Planned manufacturing activity: 70,000 machine hours
Standard variable-overhead rate per machine hour: $10
Budgeted fixed overhead: $125,000
Variable-overhead spending variance: $94,500U
Variable-overhead efficiency variance: $88,500F
Fixed-overhead budget variance: $27,500U
Total actual overhead: $680,000

Required:
Determine the following: actual fixed overhead, actual variable overhead, actual machine hours worked, standard machine hours allowed for actual production, and the fixed-overhead volume variance. (Indicate the effect of each variance by selecting "Favorable" or "Unfavorable". Select "None" and enter "0" for no effect (i.e., zero variance).)

Answer 1

1.) Actual fixed overhead=

Fixed overhead budget variance=Actual fixed overhead-budgeted fixed overhead

27500=Actual Fixed overhead-125000

Actual fixed overhead=125000+27500=152500

2.) Total Actual overhead= Actual fixed overhead + Actual variable overhead

680000=152,500+Actual variable overhead

Actual variable overhead=527,500

3.)variable overhead spending variance=Actual variable overhead cost-(Actual hours worked*standard variable overhead rate per MH)

94500=527500-(Actual hours worked*10)

Actual hours worked=433,000/10=43,300machine hours

4.) variable overhead efficiency variance=(Actual hours worked-standard hours )*rate

-88500=(43,300-standard hours )*10

-88500/10 =(43,300-standard hours)

-8,850 =43,300-standard hours

Standard hours allowed=52,150machine hours

5.) Fixed overhead rate=Budgeted fixed overhead/normal capacity

=125000/70000=1.78

Fixed overhead volume variance=

Fixed overhead rate*Normal capacity hours-standard hours allowed

1.78*(70000-52,150)

=31,773U

IF ANY DOUBTS PLEASE MENTION IN COMMENT