Explore BrainMass

Sebastian Company overhead variances

Sebastian Company, which manufactures electrical switches, uses a standard cost system and carries all inventories at standard. The standard manufacturing overhead costs per switch are based on direct labor hours and are shown below:
â?¢Variable overhead
(5 hours @ $12 per direct manufacturing labor hour) $ 60
â?¢Fixed overhead
(5 hours @ $15* per direct manufacturing labor hour) 75
Total overhead per switch$135
* Based on capacity of 200,000 direct manufacturing labor hours per month.
The following information is available for the month of December:
â?¢46,000 switches were produced although 40,000 switches were
scheduled to be produced.
â?¢225,000 direct manufacturing labor hours were worked at a total cost of
â?¢Variable manufacturing overhead costs were $2,750,000

a. Under the 2-variance method, the flexible budget variance for December was ?
b. The total variable manufacturing overhead variance was?

Solution Summary

Your response includes a chart in excel useful for future problems in analyzing all the variable overhead variances, including those requested. Click on cells to see formula.