Overhead Variances, Two- And Three-Variance Analyses 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 120,000 units requiring 480,000 direct labor hours. (Practical capacity is 500,000 hours.) Annual budgeted overhead casts total $748,800, of which $532,800 is fixed overhead. A total of 119,500 units using 478,000 direct labor hours were produced during the year. Actual variable overhead costs for the year were $241,900, and actua fixed overhead costs were $555,000. Required: 1. Compute overhead varlances using a two-variance analysis. Budget Variance Volume Variance S 2. Compute overhead variances using a three-variance analysis. Spending Variance Efficiency Variance Volume Variance $

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
icon
Related questions
Topic Video
Question

Please do not give solution in image format thanku 

Overhead Variances, Two- And Three-Variance Analyses
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 120,000 units requiring 480,000 direct labor hours. (Practical capacity is 500,000
hours.) Annual budgeted overhead costs total $748,800, of which $532,800 is fixed overhead. A total of 119,500 units using 478,000 direct labor hours were produced during the year. Actual variable overhead costs for the year were $241,900, and actual
fixed overhead costs were $555,000.
Required:
1. Compute overhead varlances using a two-variance analysis.
Budget Variance
Volume Variance
2. Compute overhead variances using a three-variance analysis.
Spending Variance
Efficiency Variance
Volume Variance
Transcribed Image Text:Overhead Variances, Two- And Three-Variance Analyses 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 120,000 units requiring 480,000 direct labor hours. (Practical capacity is 500,000 hours.) Annual budgeted overhead costs total $748,800, of which $532,800 is fixed overhead. A total of 119,500 units using 478,000 direct labor hours were produced during the year. Actual variable overhead costs for the year were $241,900, and actual fixed overhead costs were $555,000. Required: 1. Compute overhead varlances using a two-variance analysis. Budget Variance Volume Variance 2. Compute overhead variances using a three-variance analysis. Spending Variance Efficiency Variance Volume Variance
Expert Solution
steps

Step by step

Solved in 4 steps

Blurred answer
Knowledge Booster
Performance measurements
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
Similar questions
  • SEE MORE QUESTIONS
Recommended textbooks for you
FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
Accounting
ISBN:
9781259964947
Author:
Libby
Publisher:
MCG
Accounting
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education