Answer:
Explanation:
Hours Required Per Unit = 2
Production Volume = 100,000
Total Hours required = 200,000 units
1. The standard fixed overhead rate will be:
= Fixed overhead/Total hours required
= $770,000/200,000
= $3.85/hour
The standard variable overhead rate will be:
= Variable Overhead /Total Hours required
= $440,000/200000
= $2.22 /hour
2. The applied fixed overhead will be:
= standard fixed overhead rate × actual production × hours required per unit
= 3.85 × 97000 × 2
= $746,900
The applied variable overhead will be:
= standard variable overhead rate × actual production × hours required per unit
= 2.22 × 97000 × 2
= $430,680
The total fixed overhead variance will be:
= Actual overhead - Standard overhead
= $435600 - $430680
= $4920
The total variable overhead variance will be:
= $780000 - $746900
= $33100
3. The spending variance of the total fixed overhead variance will be:
= (3.85 × 200000) - 780000
= -10000
The volume variance of the total fixed overhead variance will be:
= 746900 - (3.85 × 200000)
= -23100
4. The variable overhead spending variance will be:
= (2.22 × 196000) - 430680
= -480
The variable overhead efficiency variances will be:
= 430680 - (2.22 × 196000)
= -4440
5. Based on the information given, the variances will be:
Volume Variance = -23100
Efficiency Variance = -4440
Spending Variance = (-480-10000) = -10480
