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# Variance Spending, Efficiency, Budget, and Volume

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PROBLEM 2

The following data are the actual results for Marvelous Marshmallow Company for October:

Actual output 9,000 cases
Actual machine time 40,500 per machine hours

Standard cost and budget information for Marvelous Marshmallow Company follows:

Standard variable-overhead rate \$ 9.00 machine hour
Standard quantity of machine hours 4 hours per case of marshmallows
Budgeted fixed overhead \$ 120,000 per month
Budgeted output 10,000 cases per month

REQUIRED:

1. Compute the following variances. Indicate whether each variance is favorable or unfavorable, where appropriate.

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Problem 2

Machine hours
Standard = \$9/hour
SR = 9.00
4 hours per case = \$36 per case
10,000 cases = \$360,000 budgeted variable costs

Actual = 9,000 cases
Actual overhead = \$405,000 - 4 hours per case = 405000/4 = \$101,250 / 9000 cases = \$11.25 per machine hour
AR = \$11.25

a) SR = Standard variable ...

#### Solution Summary

The expert examines variance spending, efficiency, budgets and volumes.

\$2.19