Smithson Company Manufacturers shirts. During June, Smithson made 1,500 shirts but had budgeted production at 1,575 shirts. Smithson gathered the following additional data:
Variable overhead cost standard
$1.00 per DLHr
Direct labor efficiency standard
4.50 DLHr per shirt
Actual amount of direct labor hours
6,890 DLHr
Actual cost of variable overhead
$7,579
Fixed overhead cost standard
$0.40 per DLHr
Budgeted fixed overhead
$2,835
Actual cost of fixed overhead
$2,945
Calculate the variable overhead cost variance.
Select theâ formula, then enter the amounts and compute the cost variance for variable overheadâ (VOH) and identify whether the variance is favorableâ (F) or unfavorableâ (U).
(
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)
x
=
VOH Cost Variance
(
-
)
x
=
Calculate the variable overhead efficiency variance.
Select theâ formula, then enter the amounts and compute the efficiency variance for variable overhead and identify whether the variance is favorableâ (F) or unfavorableâ (U).
(
-
)
x
=
VOH Efficiency Variance
(
-
)
x
=
Calculate the total variable overhead variance
The total variable overhead variance is BLANK, is it favorable or unfavorable?
Calculate the fixed overhead cost variance
Select theâ formula, then enter the amounts and compute the cost variance for fixed overheadâ (FOH) and identify whether the variance is favorableâ (F) or unfavorableâ(U).
-
=
Fixed Overhead Cost Variance
-
=
âNow, select theâ formula, then enter the amounts and compute the fixed overhead volume variance and identify whether the variance is favorableâ (F) or unfavorableâ(U).
-
=
Fixed Overhead Volume Variance
-
=
Calculate the total fixed overhead variance.
The total fixed overhead variance is BLANK, is it favorable or unfavorable?
Smithson Company Manufacturers shirts. During June, Smithson made 1,500 shirts but had budgeted production at 1,575 shirts. Smithson gathered the following additional data:
| Variable overhead cost standard | $1.00 per DLHr |
| Direct labor efficiency standard | 4.50 DLHr per shirt |
| Actual amount of direct labor hours | 6,890 DLHr |
| Actual cost of variable overhead | $7,579 |
| Fixed overhead cost standard | $0.40 per DLHr |
| Budgeted fixed overhead | $2,835 |
| Actual cost of fixed overhead | $2,945 |
Calculate the variable overhead cost variance.
Select theâ formula, then enter the amounts and compute the cost variance for variable overheadâ (VOH) and identify whether the variance is favorableâ (F) or unfavorableâ (U).
| ( | - | ) | x | = | VOH Cost Variance | |||||
| ( | - | ) | x | = | ||||||
Calculate the variable overhead efficiency variance.
Select theâ formula, then enter the amounts and compute the efficiency variance for variable overhead and identify whether the variance is favorableâ (F) or unfavorableâ (U).
| ( | - | ) | x | = | VOH Efficiency Variance | |||||
| ( | - | ) | x | = | ||||||
Calculate the total variable overhead variance
The total variable overhead variance is BLANK, is it favorable or unfavorable?
Calculate the fixed overhead cost variance
Select theâ formula, then enter the amounts and compute the cost variance for fixed overheadâ (FOH) and identify whether the variance is favorableâ (F) or unfavorableâ(U).
| - | = | Fixed Overhead Cost Variance | ||||
| - | = | |||||
âNow, select theâ formula, then enter the amounts and compute the fixed overhead volume variance and identify whether the variance is favorableâ (F) or unfavorableâ(U).
| - | = | Fixed Overhead Volume Variance | ||||
| - | = | |||||
Calculate the total fixed overhead variance.
The total fixed overhead variance is BLANK, is it favorable or unfavorable?
Related questions
Problem 1:
Peaceful Corporation manufactures figurines based on thefollowing information.
| Standard costs | $20 | |
| Materials (4 ounces at $5) | $8 | |
| Direct labor (1 hour per unit) | $4 | |
| Variable overhead (based on direct labor hours) | ||
| Fixed overhead budget | $19,000 | |
| Actual results and costs | ||
| Materials purchased | ||
| Units | 9,000 | |
| Cost | $39,600 | |
| Materials used in production | ||
| Finished product units | 2,000 | |
| Raw material (ounces) | 8,200 | |
| Direct labor hours | 2,000 | |
| Direct labor cost | $20,000 | |
| Variable overhead costs | $5,980 | |
| Fixed overhead costs | $19,500 |
Required:
- Prepare a performance report for Peaceful using the following headings.
- Actual Production Costs
- Flexible Budget Costs
- Flexible Budget Variances
- Compute the following variances (show calculations).
- Materials usage variance
- Labor rate variance
- Labor efficiency variance
- Variable overhead spending variance
- Variable overhead efficiency variance
- Fixed overhead budget variance
- Give one possible explanation for each of the six variances computed in part b.
Problem 2:
The following is the current variable costing income statementfor Dolly Corporation.
| Sales (5,000 units) | $100,000 | |
| Variable expenses Cost of goods sold | $35,000 | |
| Selling (10% of sales) | $10,000 | $45,000 |
| Contribution margin | $55,000 | |
| Fixed expenses | ||
| Manufacturing overhead | $24,000 | |
| Administrative | $12,500 | $36,500 |
| Operating income | $18,500 |
Below is the following information on operations for DollyCorporation.
| Beginning inventory (units) | 0 |
| Units produced (units) | 6,000 |
| Manufacturing costs | |
| Direct labor (per unit) | $5.00 |
| Direct materials (per unit) | $2.30 |
| Variable overhead (per unit) | $2.40 |
Required:
Prepare an absorption costing income statement.
Problem 3:
The following information was compiled for two models of cellphones.
| 3G model | 4G model | Average | |
| Budgeted Contribution Margin | $80.00 | $120.00 | $95.25 |
| Budgeted Sales in Units | 28,000 | 18,000 | |
| Actual Sales in Units | 28,600 | 16,500 |
Required:
Calculate the sales mix variance. (Show your calculations.)
Portland Company's Ironton Plant produces precast ingots forindustrial use. Carlos Santiago, who was recently appointed generalmanager of the Ironton Plant, has just been handed the plant%u2019scontribution format income statement for October. The statement isshown below: |
| Budgeted | Actual | |||
| Sales (7,000 ingots) | $ | 255,000 | $ | 255,000 |
| Variable expenses: | ||||
| Variable cost of goods sold* | 85,400 | 104,590 | ||
| Variable selling expenses | 15,000 | 15,000 | ||
| Total variable expenses | 100,400 | 119,590 | ||
| Contribution margin | 154,600 | 135,410 | ||
| Fixed expenses: | ||||
| Manufacturing overhead | 64,000 | 64,000 | ||
| Selling and administrative | 79,000 | 79,000 | ||
| Total fixed expenses | 143,000 | 143,000 | ||
| Net operating income (loss) | $ | 11,600 | $ | (7,590) |
| | | | | |
| *Contains direct materials, direct labor, and variablemanufacturing overhead. |
Mr. Santiago was shocked to see theloss for the month, particularly because sales were exactly asbudgeted. He stated, "I sure hope the plant has a standard costsystem in operation. If it doesn't, I won't have the slightest ideaof where to start looking for the problem." |
The plant does use a standard costsystem, with the following standard variable cost per ingot: |
| Standard Quantity or Hours | Standard Price or Rate | Standard Cost | |||
| Direct materials | 4.0 pounds | $ | 2.40 per pound | $ | 9.60 |
| Direct labor | 0.3 hours | $ | 7.00 per hour | 2.10 | |
| Variable manufacturing overhead | 0.2 hours* | $ | 2.50 per hour | 0.50 | |
| Total standard variable cost | $ | 12.20 | |||
| | | ||||
| *Based on machine-hours. |
| During October the plant produced 7,000 ingots and incurred thefollowing costs: |
| a. | Purchased 33,000 pounds of materials at a cost of $2.85 per pound.There were no raw materials in inventory at the beginning of themonth. |
| b. | Used 27,800 pounds of materials in production. (Finished goods andwork in process inventories are insignificant and can beignored.) |
| c. | Worked 2,700 direct labor-hours at a cost of $6.70 per hour. |
| d. | Incurred total variable manufacturing overhead cost of $4,930 forthe month. A total of 1,700 machine-hours was recorded. |
| It is the company%u2019s policy to close all variances to cost ofgoods sold on a monthly basis. |
| 1. | Compute the following variances for October: |
| a. | Direct materials price and quantity variances. (Input all amounts aspositive values. Leave no cells blank - be certain to enter "0"wherever required. Indicate the effect of each variance byselecting "F" for favorable, "U" for unfavorable, and "None" for noeffect (i.e., zero variance.) |
| Materials price variance | $ | (Click to select)FUNone |
| Materials quantity variance | $ | (Click to select)FNoneU |
| b. | Direct labor rate and efficiency variances. (Input all amounts aspositive values. Leave no cells blank - be certain to enter "0"wherever required. Indicate the effect of each variance byselecting "F" for favorable, "U" for unfavorable, and "None" for noeffect (i.e., zero variance.) |
| Labor rate variance | $ | (Click to select)FUNone |
| Labor efficiency variance | $ | (Click to select)NoneUF |
| c. | Variable overhead rate and efficiency variances. (Input all amounts aspositive values. Do not round your intermediate calculations. Leaveno cells blank - be certain to enter "0" wherever required.Indicate the effect of each variance by selecting "F" forfavorable, "U" for unfavorable, and "None" for no effect (i.e.,zero variance.) |
| Variable overhead rate variance | $ | (Click to select)FNoneU |
| Variable overhead efficiency variance | $ | (Click to select)FUNone |
| 2a. | Summarize the variances that you computed in (1) above by showingthe net overall favorable or unfavorable variance for October.(Input the amount as apositive value. Leave no cells blank - be certain to enter "0"wherever required. Indicate the effect of variance by selecting "F"for favorable, "U" for unfavorable, and "None" for no effect (i.e.,zero variance.) |
| Net variance | $ | (Click to select)UFNone |
| 3. | Pick out the two most significant variances that you computed in(1) above. (You may select morethan one answer. Single click the box with the question mark toproduce a check mark for a correct answer and double click the boxwith the question mark to empty the box for a wronganswer.) | ||||||||||||
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