Question

Unit 6 Lab-Principles of Accounting II Exercise 213 Dart Company developed the following standard costs for its product for 2019: DART COMPANY Standard Cost Card Cost Element Standard Quantity × Standard Price = Standard Cost Direct materials 4 pounds $ 5 $20 Direct labor 2 hours 10 20 Variable overhead 2 hours 4 8 Fixed overhead 2 hours 2 4 $52 The company expected to work at the 120,000 direct labor hours level of activity and produce 60,000 units of product. Actual results for 2019 were as follows: • 56,800 units of product were actually produced. • Direct labor costs were $1,092,000 for 112,000 direct labor hours actually worked. • Actual direct materials purchased and used during the year cost $1,108,800 for 231,000 pounds . • Total actual manufacturing overhead costs were $680,000. Compute the following variances for Dart Company for 2019 and indicate whether the variance is favorable or unfavorable.

Compute:

Overhead Controllable Variance

Overhead Volume Variance $

Answer 1

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Dart Company
Answer 1	Amount $	Amount $
Overhead Controllable Variance
Total actual manufacturing overhead costs		680,000.00
Less:
Budgeted fixed overhead
Expected direct labor hours	120,000.00
Fixed overhead rate	2.00
Budgeted fixed overhead		240,000.00
Budgeted variable overhead
Actual direct labor hours	112,000.00
Variable overhead rate	4.00
Budgeted variable overhead		448,000.00
Overhead Controllable Variance (Favorable)		(8,000.00)
Overhead volume Variance	Amount $	Amount $
Budgeted fixed overhead
Expected direct labor hours	120,000.00
Fixed overhead rate	2.00
Budgeted fixed overhead		240,000.00
Less:
Fixed overhead applied
Expected direct labor hours	112,000.00
Fixed overhead rate	2.00
Fixed overhead applied		224,000.00
Overhead volume Variance (Unfavorable)		16,000.00