Straightforward Computation of Overhead Variances
The following data are the actual results for Marvelous Marshmallow Company for October.
Actual output 9,000 cases
|
Actual variable overhead
|
405,000
|
|
Actual fixed overhead
|
122,000
|
|
Actual machine time
|
40,500 machine hours
|
Standard cost and budget information for Marvelous Marshmallow Company follows:
Standard variable-overhead rate $9.00 per machine hour Standard quantity of machine hours 4 hours per case of marshmallows Budgeted fixed overhead $120,000 per month Budgeted output 10,000 cases per month
Required:
1. Use any of the methods explained in the chapter to compute the following variances.
Indicate whether each variance is favorable or unfavorable, where appropriate.
a. Variable-overhead spending variance.
b. Variable-overhead efficiency variance.
c. Fixed-overhead budget variance.
d. Fixed-overhead volume variance.
2. Build a spreadsheet: Construct an Excel spreadsheet to solve the preceding requirement. Show how the solution will change if the following information changes: actual output was 9,100 cases, and actual variable overhead was $395,000.