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    Crystal Glassware Company: Variances

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    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.

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    https://brainmass.com/business/budgets/crystal-glassware-company-has-the-following-standards-and-flexible-budget-data-212466

    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.

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