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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

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  1. 5 May, 00:38
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    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)
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