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Overhead Variances

1. Crystal Glassware Company has the following standards and flexible budget data.
Standard variable overhead rate................. $6.00 per direct labor hour
Standard quantity of direct labor................2 hours per unit of output
Budgeted fixed overhead........................$100,000
Budgeted output...................................25,000 units

Actual results for April are as follows:
Actual output.....................................20,000 units
Actual variable overhead.......................$320,000
Actual fixed overhead..........................$97,000
Actual direct labor..............................50,000 hours

Use the variance formulas to compute the following variances. Indicate whether each variance is favorable or unfavorable, where appropriate.
1. Variable overhead spending variance.
2. Variable overhead efficiency variance.
3. Fixed overhead budget variance.
4. Fixed overhead volume variance.

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Solution Summary

The solution computes variable overhead spending variance, Variable overhead efficiency variance, Fixed overhead budget variance, Fixed overhead volume variance.

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