Question:
Two-variance overhead analysis
The standard specifications for an electric motor manufactured by B&B Electric Corporation follow:
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Standard cost per unit:
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|
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Materials (2 lb $5 per lb)
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$10.00
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Labor (4 hr $6 per hr)
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24.00
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Factory overhead (4 hr $338* per hr)
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13.52
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Total standard cost
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$47.52
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1.00 variable þ $2.38 fixed ¼ $3.38
Factory overhead rates are based on a normal 70% capacity and use the following flexible budget:
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Normal
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|
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70%
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85%
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100%
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Motors to be produced
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2,100
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2,550
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3,000
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Variable overhead
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$8,400
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$10,200
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$12,000
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Fixed overhead
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$20,000
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$20,000
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$20,000
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The actual production was 2,500 motors, and factory overhead costs totaled $29,750.
Required:
Calculate the factory overhead variances using the two-variance method.