Compute the overhead variances for the year: variable overhead cost variance, variable overhead efficiency variance, fixed overhead cost variance, and fixed overhead volume variance

Question

Cristofer Hester

Business

5 May, 00:14

Compute the overhead variances for the year: variable overhead cost variance, variable overhead efficiency variance, fixed overhead cost variance, and fixed overhead volume variance

+3

Answers (1)

Know the Answer?

Eleanor Stevens · Answer 1

a) VOH Cost variance = Actual cost - (Std cost per hr X Actual hrs worked)

= 10700 - [ (8000/1600) X (6900*0.25) ]

10700 - [ 5 x 1725] = 10700-8625 = 2075 (A)

b) VOH Efficiency variance = (Actual hours - Std hours allowed) X Std price

= [ (6900 x 0.25) - (0.4 x 6900) ] x (8000/1600) = 5175 (A)

c) FOH Cost variance = Actual OH - Budgeted OH = 2840 - [3200/4000] x 6900 = 2680 (F)

d) FOH Volume variance = Budgeted OH - Allocated OH = [1600 - (0.25 X 6900) ] x 3200/1600 = 250 (F)

Things to hep:

1) c is supposed to read: [ c) FOH Cost variance = Actual OH - Budgeted OH = 2840 - [ (3200/4000) x 6900 ] = 2680 (F)

2) 2840 - [ (3200/4000) x 6900 ] = 2680 (F)