Question

Static budget variable overhead	$7,800
Static budget fixed overhead	$3,900
Static budget direct labor hours	1,300	hours
Static budget number of units	5,200	units

Goldman allocates manufacturing overhead to production based on standard direct labor hours. Last ​month,

Goldman reported the following actual ​results: actual variable​ overhead,

$ 10,200 actual fixed​overhead, $ 2, 830 actual production of 7,100 units at

0.20 direct labor hours per unit. The standard direct labor time is 0.25

direct labor hours per unit ​(1,300 static direct labor hours​/5,200 static​ units).

Requirements

1.	Compute the overhead variances for the​ month: variable overhead cost​ variance, variable overhead efficiency​ variance, fixed overhead cost​ variance, and fixed overhead volume variance.
2.	Explain why the variances are favorable or unfavorable.

Requirement 1. Compute the overhead variances for the​ month: variable overhead cost​ variance, variable overhead efficiency​ variance, fixed overhead cost​ variance, and fixed overhead volume variance.

Begin by selecting the formulas needed to compute the variable overhead​ (VOH) and fixed overhead​ (FOH) variances, and then compute each variance amount.

(Actual cost - Standard cost) x Actual hours	=	VOH cost variance
(Actual hours - Standard hours allowed) x Standard cost	=	VOH efficiency variance
Actual overhead - Budgeted overhead	=	FOH cost variance
Budgeted overhead - Allocated overhead	=	FOH volume variance

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Enter any number in the edit fields and the

Answer 1

ans 1		in $
(Actual cost - Standard cost) x Actual hours	=	VOH cost variance
10200-(1420*6)		1680	U
(Actual hours - Standard hours allowed) x Standard cost	=	VOH efficiency variance
(1420-(7100*.25))*6		2130	F
Actual overhead - Budgeted overhead	=	FOH cost variance
2830-3900		1070	F
Budgeted overhead - Allocated overhead	=	FOH volume variance
3900-(7100*.25*3)		1425	U
working
Budgeted fixed overhead per hour
3900/1300		3	per hour
Budgeted Variable overhead per hour
7800/1300		6	per hour
Actual hours
7100*.2		1420	hours
SH allowed 7100*.25		1775	Hours
ans 2
ans 2 As actual variable overhead rate per hour is more than standard overhead
rate per hour hence variable overhead rate variance is unfavorable,
When standard hours allowed is less than actual hours used than there is unfavorable
variable overhead efficiency variance.
When actual fixed overhead is less than budgeted overhead than favorable variance
When applied FOH volume variance is more than budgeted than its favorable variance
If any doubt please comment