Question

Compute the overhead variances for the​ month: variable overhead cost​ variance, variable overhead efficiency​ variance, fixed overhead cost​ variance, and fixed overhead volume variance. 2. Explain why the variances are favorable or unfavorable.

Answer 1

Answer:

A variance is favorable when the actual costs or actual quantity were lower than estimated.

Explanation:

We weren't provided with enough information to calculate each variance. I will provide with the formulas.

Variable manufacturing overhead rate (cost) variance= (standard rate - actual rate)* actual quantity

Variable overhead efficiency variance= (Standard Quantity - Actual Quantity)*Standard rate

Fixed overhead spending variance= (actual fixed overhead costs - allocated fixed overhead)

Manufacturing overhead volume variance= (Estimated manufacturing overhead rate*budgeted allocation base) - (Estimated manufacturing overhead rate* Actual amount of allocation base)

A variance is favorable when the actual costs or actual quantity were lower than estimated.