FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Alden Company uses a three-
| Budgeted fixed factory overhead: | |||
|---|---|---|---|
| Setup cost | $ 54,600 | ||
| Other | 178,000 | $ 232,600 | |
| Total |
$ 481,000 | ||
| Variable factory overhead rate: | |||
| Per setup | $ 400 | ||
| Per machine hour | $ 6.00 | ||
| Total standard machine hours allowed for the units manufactured | 30,000 | hours | |
| Machine hours actually worked | 34,500 | hours | |
| Actual total number of setups | 22 | ||
| Actual number of units produced during the year | 7,500 | ||
| Standard number of setups for units produced during the year | 30 |
Required:
1. Compute (a) the total overhead spending variance, (b) the overhead efficiency variance, and (c) the total overhead flexible
2. Assume that the company includes all setup costs as variable factory overhead. The budgeted total fixed overhead, therefore, is $178,000, and the standard variable overhead rate per setup is $2,500. What are (a) the total overhead spending variance, (b) the overhead efficiency variance, and (c) the total overhead flexible budget variance for the year? Label each variance as favorable (F) or unfavorable (U).
3. Assume that the company uses only machine hours as the activity measure to apply both variable and fixed overhead, and that it includes all setup costs as variable factory overhead. What are (a) the Total Overhead Spending Variance, (b) the Overhead Efficiency Variance, and (c) the total Overhead Flexible Budget Variance for the year? Indicate whether each variance is favorable (F) or unfavorable (U).
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