Explore BrainMass

# Crystal Glassware Company: Variances

This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

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

Actual results for April are 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.

© BrainMass Inc. brainmass.com October 1, 2020, 10:11 pm ad1c9bdddf

#### Solution Preview

(1)
Variable overhead spending variance = actual variable overhead costs - (standard variable-overhead rate * actual hours of labor used) = \$320,000 - \$6.00 per direct-labor hour * 50,000 hours = \$20,000, which is unfavorable since the actual overhead costs exceeds the budgeted amount.

(2)
Variable Overhead Efficiency Variance = (actual labor-hours - standard labor-hours allowed for actual ...

#### Solution Summary

This response analyzes the variances of Crystal Glassware Company.

\$2.19