Question

Calgary Paper Company produces paper for photocopiers. The company has developed standard overhead rates based on a monthly capacity of 80,000 direct-labor hours as follows:

  

Standard costs per unit (one box of paper):
Variable overhead (3 direct-labor hours @ $4)	$	12
Fixed overhead (3 direct-labor hours @ $12)		36
Total	$	48

   

During April, 26,000 units were scheduled for production: however, only 20,000 units were actually produced. The following data relate to April.

   

1. Actual direct-labor cost incurred was $1,425,000 for 75,000 actual hours of work.

2. Actual overhead incurred totaled $1,372,500, of which $472,500 was variable and $900,000 was fixed.

Required:

Prepare two exhibits similar to Exhibit 11-6 and Exhibit 11-8, which show the following variances. State whether each variance is favorable or unfavorable, where appropriate.

1. Variable-overhead spending variance.

2. Variable-overhead efficiency variance.

3. Fixed-overhead budget variance.

4. Fixed-overhead volume variance.

Variable-Overhead Spending and Efficiency Variances. (Select "None" and enter "0" for no effect (i.e., zero variance). Round "Actual Rate" and "Standard Rate" to 2 decimal places.)

Variable-Overhead Spending And Efficiency Variances

(Hours = Direct-Labor Hours)

(1)

(2)

(3)

(4)

Actual Variable Overhead

Projected Variable Overhead

Flexible Budget: Variable Overhead

Variable Overhead Applied To Work-In-Process

Actual Qty (AQ)

×

Actual Rate (AVR)

Actual Qty (AQ)

×

Standard Rate (SVR)

Standard Allowed Qty (SQ)

×

Standard Rate (SVR)

Standard Allowed Qty (SQ)

×

Standard Rate (SVR)

×

×

×

×

hours

per hour

hours

per hour

hours

per hour

hours

per hour

Variable-overhead spending variance

Variable-overhead efficiency variance

No difference

Answer 1