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Oerstman, Inc., uses a standard costing system and develops its overhead rates from the current annual budget. The budget is based on an expected annual output c 127,000 units requiring 508,000 direct labor hours. (Practical capacity is 528,000 hours.) Annual budgeted overhead costs total $848,360, of which $604,520 is fixed overhead. A total of 119,200 units using 506,000 direct labor hours were produced during the year. Actual variable overhead costs for the year were $261,400, and ac fixed overhead costs were $555,550. Required:

Oerstman, Inc., uses a standard costing system and develops its overhead rates from the current annual budget. The budget is based on an expected annual output c 127,000 units requiring 508,000 direct labor hours. (Practical capacity is 528,000 hours.) Annual budgeted overhead costs total $848,360, of which $604,520 is fixed overhead. A total of 119,200 units using 506,000 direct labor hours were produced during the year. Actual variable overhead costs for the year were $261,400, and ac fixed overhead costs were $555,550. Required:

Cornerstones of Cost Management (Cornerstones Series)
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter9: Standard Costing: A Functional-based Control Approach
Section: Chapter Questions
Problem 16E: Refer to the data in Exercise 9.15. Required: 1. Compute overhead variances using a two-variance...
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Overhead Variances, Four-Variance Analysis Oerstman, Inc., uses a standard costing system and develops its overhead rates from the current annual budget. The budget is based on an expected annual output of 127,000 units requiring 508,000 direct labor hours. (Practical capacity is 528,000 hours.) Annual budgeted overhead costs total $848,360, of which $604,520 is fixed overhead. A total of 119,200 units using 506,000 direct labor hours were produced during the year. Actual variable overhead costs for the year were $261,400, and actual fixed overhead costs were $555,550. Required: 1. Compute the fixed overhead spending and volume variances. Fixed Overhead Spending Variance Fixed Overhead Volume Variance 2. Compute the variable overhead spending and efficiency variances. Do not round intermediate calculations Variable Overhead Spending Variable Overhead Efficiency Variance
Transcribed Image Text:Overhead Variances, Four-Variance Analysis Oerstman, Inc., uses a standard costing system and develops its overhead rates from the current annual budget. The budget is based on an expected annual output of 127,000 units requiring 508,000 direct labor hours. (Practical capacity is 528,000 hours.) Annual budgeted overhead costs total $848,360, of which $604,520 is fixed overhead. A total of 119,200 units using 506,000 direct labor hours were produced during the year. Actual variable overhead costs for the year were $261,400, and actual fixed overhead costs were $555,550. Required: 1. Compute the fixed overhead spending and volume variances. Fixed Overhead Spending Variance Fixed Overhead Volume Variance 2. Compute the variable overhead spending and efficiency variances. Do not round intermediate calculations Variable Overhead Spending Variable Overhead Efficiency Variance
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