Crystal Glassware Company has the following standards and flexible-budget data. Standard variable-overhead rate................................ $6.00 per direct-labor hourStandard quantity of direct labor ............................... 2 hours per unit of outputBudgeted fixed overhead ..................................................... $100,000Budgeted output ............................................................................................... 25,000 units Actual results for April are as follows: Actual output ..................................................................................... 20,000 unitsActual variable overhead ............................................................... $320,000Actual fixed overhead ...................................................................... $97,000Actual direct labor ............................................................................. 50,000 hours Use the variance formulas to compute the following variances. Indicate whether each variance is favorable or unfavorable, where appropriate.1. Variable-overhead spending variance.2. Variable-overhead efficiency variance.3. Fixed-overhead budget variance.4. Fixed-overhead volume variance.
Variance Analysis
In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.
Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
Crystal Glassware Company has the following standards and flexible-budget data.
Standard variable-
Standard quantity of direct labor ............................... 2 hours per unit of output
Budgeted fixed overhead ..................................................... $100,000
Budgeted output ............................................................................................... 25,000 units
Actual results for April are as follows:
Actual output ..................................................................................... 20,000 units
Actual variable overhead ............................................................... $320,000
Actual fixed overhead ...................................................................... $97,000
Actual direct labor ............................................................................. 50,000 hours
Use the variance formulas to compute the following variances. Indicate whether each variance is favorable or unfavorable, where appropriate.
1. Variable-overhead spending variance.
2. Variable-overhead efficiency variance.
3. Fixed-overhead
4. Fixed-overhead volume variance.
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