In: Accounting
Comfort Company manufactures pillows. The 2020 operating budget is based on production of 1,000 pillows with 0.50 machine-hour allowed per pillow. Budgeted variable overhead per hour was $10. Actual production for 2020 was 750 pillows using 400 machine-hours. Actual variable costs were $9 per machine-hour.
Required: Calculate the variable overhead spending and efficiency variances.
Variable Overhead Spending Variance |
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( |
Standard Rate |
- |
Actual Rate |
) |
x |
Actual Labor Hours |
( |
$ 10.00 |
- |
$ 9.00 |
) |
x |
400 |
400 |
||||||
Variance |
$ 400.00 |
Favourable-F |
Variable Overhead Efficiency Variance |
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( |
Standard Hours = 750 pillows x 0.5 hrs |
- |
Actual Hours |
) |
x |
Standard Rate |
( |
375 |
- |
400 |
) |
x |
$ 10.00 |
-250 |
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Variance |
$ 250.00 |
Unfavourable-U |