Question

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The Platter Valley factory of Bybee Industries manufactures field boots. The cost of each boot includes direct materials, direct labor, and manufacturing overhead. The firm traces all direct costs to products, and it assigns overhead based on direct labor hours.

The company budgeted $15,000 variable overhead and 2,500 direct labor hours to manufacture 5,000 pairs of boots in March.

The factory used 2,700 direct labor hours in March to manufacture 4,800 pairs of boots and spent $15,600 on variable overhead during the month.

For March the Platter Valley factory of Bybee Industries budgeted $90,000 of fixed overhead. Its practical capacity is 2,500 direct labor hours per month (to manufacture 5,000 pairs of boots).

The actual fixed overhead incurred for the month was $92,000.

1.

value:
10.00 points

Required information

The Platter Valley factory of Bybee Industries uses a three-variance analysis of the total factory overhead variance.

Required:
1.	Compute the total overhead spending variance, the efficiency variance, and the fixed overhead production volume variance.

      

2.	Determine the spending variances (both variable and fixed), the efficiency variance, and the fixed overhead production volume variance.

      

References

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WorksheetDifficulty: 2 MediumLearning Objective: 15-02 Use flexible budgets to calculate and properly interpret standard cost variances for manufacturing overhead.

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2.

value:
10.00 points

Required information

The Platter Valley factory of Bybee Industries uses a two-variance analysis of the total factory overhead variance.

Required:
1.	Compute the total flexible-budget variance and the fixed overhead production volume variance for March.

      

2.	Determine the flexible-budget variance and the fixed overhead production volume variance for March.

      

Answer 1

Budgeted Variable Overhead = $ 15000
Budgted Fixed Overhead = $ 90000

Budgted Direct Labor Hours = 2500 Hrs
Budgeted Units = 5000 Pairs
Standard hours for one pair = 2500/5000 = 0.5 Hours

Standard factory overhead rate:
     Variable = 15000/2500 = $ 6 /Hr
     Fixed = 90000/2500 = $ 36 /Hr
     Total = 6 + 36 = $ 42 /Hr