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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 variable overhead $ 405,000
    Actual fixed overhead $ 122,000
    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.

    a) Variable-overhead spending variance.

    b) Variable-overhead efficiency variance.

    c) Fixed-overhead budget variance.

    d) Fixed-overhead volume variance.

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    https://brainmass.com/business/budgets/variance-spending-efficiency-budget-volume-514955

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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

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