In: Accounting
Overhead Variances, Four-Variance Analysis
Oerstman, Inc., uses a standard costing system and develops its overhead rates from the current annual budget. The budget is based on an expected annual output of 123,000 units requiring 492,000 direct labor hours. (Practical capacity is 512,000 hours.) Annual budgeted overhead costs total $811,800, of which $580,560 is fixed overhead. A total of 119,100 units using 490,000 direct labor hours were produced during the year. Actual variable overhead costs for the year were $261,900, and actual fixed overhead costs were $555,350.
Required:
1. Compute the fixed overhead spending and volume variances.
Fixed Overhead Spending Variance | $ | |
Fixed Overhead Volume Variance | $ |
2. Compute the variable overhead spending and efficiency variances. Do not round intermediate calculations
Variable Overhead Spending Variance | $ | |
Variable Overhead Efficiency Variance | $ |