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    Banner Inc. variable overhead spending and efficiency varia

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    Banner Inc.bases its variable overhead performance report on the actual direct labor hours of the period. Data concerning the most recent year that ended on Dec. 31 are as follows:
    Budgeted direct labor hours 12,000
    Actual direct labor hours 13,500
    Standard direct laabor hours allowed 13,000

    Cost formula (per direct labor hour):
    Indirect labor $0.85
    Supplies $0.30
    Electricity $0.15

    Actual costs incurrred:
    Indirect labor $11,600
    Supplies $ 4,000
    Electricity $ 2,050

    Management would like to compute both the spending and efficiency variances for variable overhead in the company's variable overhead performance report.
    I need help preparing a variable overhead performance report with both the variable overhead spending and efficiency variances. Please show computations to help me to better understand this process.

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    Solution Summary

    Your tutorial for variable overhead variance is attached.