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