Question

In: Accounting

Comfort Company manufactures pillows. The 2020 operating budget is based on production of 1,000 pillows with...

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.

Solutions

Expert Solution

  • 1

Variable Overhead Spending Variance

(

Standard Rate

-

Actual Rate

)

x

Actual Labor Hours

(

$                             10.00

-

$                       9.00

)

x

400

400

Variance

$                  400.00

Favourable-F

  • 2

Variable Overhead Efficiency Variance

(

Standard Hours = 750 pillows x 0.5 hrs

-

Actual Hours

)

x

Standard Rate

(

375

-

400

)

x

$                        10.00

-250

Variance

$                  250.00

Unfavourable-U


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