Question

Jackman Company produces a single product. Jackman employs a standard costing sys-

tem and uses a flexible budget to predict overhead costs at various levels of activity. For

the most recent year, Jackman used a standard overhead rate equal to $6.25 per direct

labor hour. The rate was computed using expected activity. Budgeted overhead costs

are $80,000 for 10,000 direct labor hours and $120,000 for 20,000 direct labor hours.

During the past year, Jackman generated the following data:

a. Actual production: 4,000 units.

b. Fixed overhead volume variance: $1,750 U.

c. Variable overhead efficiency variance: $3,200 F.

d. Actual fixed overhead costs: $41,335.

e. Actual variable overhead costs: $70,000.

Required:

1. Determine the fixed overhead spending variance.

2. Determine the variable overhead spending variance.

3. Determine the standard hours allowed per unit of product.

4. Assuming the standard labor rate is $9.50 per hour, compute the direct labor effi-

ciency variance

Answer 1