The Faraday Plant of Hindle, Incorporated shows the following overhead information for the current period: Actual overhead incurred Budgeted fixed overhead Standard variable overhead rate per direct labor-hour Standard hours allowed for actual production Actual labor-hours used Variable overhead: Price variance Efficiency variance $ 644,000 ($172,600 fixed and $471,400 variable) $ 176,880 (10,040 direct labor-hours budgeted) $45.70 Required: What are the variable overhead price and efficiency variances and the fixed overhead price variance? Note: Indicate the effect of each variance by selecting "F" for favorable, or "U" for unfavorable. If there is no effect, do not select either option. Fixed overhead: Price variance 11,480 hours 11,840 hours
The Faraday Plant of Hindle, Incorporated shows the following overhead information for the current period: Actual overhead incurred Budgeted fixed overhead Standard variable overhead rate per direct labor-hour Standard hours allowed for actual production Actual labor-hours used Variable overhead: Price variance Efficiency variance $ 644,000 ($172,600 fixed and $471,400 variable) $ 176,880 (10,040 direct labor-hours budgeted) $45.70 Required: What are the variable overhead price and efficiency variances and the fixed overhead price variance? Note: Indicate the effect of each variance by selecting "F" for favorable, or "U" for unfavorable. If there is no effect, do not select either option. Fixed overhead: Price variance 11,480 hours 11,840 hours
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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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.
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Transcribed Image Text:The Faraday Plant of Hindle, Incorporated shows the following overhead information for the current period:
Actual overhead incurred
Budgeted fixed overhead
Standard variable overhead rate per direct labor-hour
Standard hours allowed for actual production
Actual labor-hours used
Variable overhead:
Price variance
Efficiency variance
$ 644,000 ($172,600 fixed and $471,400 variable)
$ 176,880 (10,040 direct labor-hours budgeted)
$ 45.70
Required:
What are the variable overhead price and efficiency variances and the fixed overhead price variance?
Note: Indicate the effect of each variance by selecting "F" for favorable, or "U" for unfavorable. If there is no effect, do not
select either option.
Fixed overhead:
Price variance
11,480 hours
11,840 hours
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