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Variable overhead variance

Please see the problem below and provide the answer to "e" and "f" only.

Thank you

The standards for ONE carton of Special Soap are as follows:
Direct materials ....................................... 4 lbs. @ $ 5.10/lb.
Direct labor ............................................ 3 hrs @ $10.50/hr.
Variable Overhead ................................... 3 hrs. @ $ 6.80/hr.
During the month ended June 30, the following activities took place:
9,200 lbs. of raw material were purchased for inventory at a total cost of $5.25/lb.
2,100 cartons of finished product were produced and 8,450 lbs. of raw material were used.
6,140 labor hours were worked at a total cost of $66,619.
$40,831 of actual variable overhead costs were incurred.
REQUIRED: Calculate each of the following variances.
(a) Raw materials purchase price variance
(b) Raw materials usage variance
(c) Direct labor rate variance
(d) Direct labor efficiency variance
(e) Variable overhead spending variance
(f) Variable overhead efficiency variance

Solution Preview

(e) Variable overhead spending variance = actual overhead costs - (standard rate x actual hours of labor used).
Actual overhead costs = 40,831
Standard rate = $6.80/hr
Actual ...

Solution Summary

The solution explains how to calculate variable overhead spending variance and variable overhead efficiency variance

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