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 @ $5)	$	15
Fixed overhead (3 direct-labor hours @ $10)		30
Total	$	45

   

During April, 35,000 units were scheduled for production: however, only 29,000 units were actually produced. The following data relate to April.

   

Actual direct-labor cost incurred was $1,869,000 for 89,000 actual hours of work.

Actual overhead incurred totaled $1,390,100, of which $525,100 was variable and $865,000 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.

Variable-overhead spending variance.

Variable-overhead efficiency variance.

Fixed-overhead budget variance.

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 Fixed-Overhead Budget and Volume Variances. (Select "None" and enter "0" for no effect (i.e., zero variance).) Fixed-Overhead Budget And Volume Variances (Hours = Direct-Labor Hours) (1) (2) (3) Actual Fixed Overhead Budgeted Fixed Overhead Fixed Overhead Applied To Work In Process Standard Allowed Hours × Standard Fixed-Overhead Rate × hours per hour Fixed-overhead budget variance Fixed-overhead volume variance

Answer 1