Question - Flexible Budget, Overhead Variances
Shumaker Company manufactures a line of high-top basketball shoes. At the beginning of the year, the following plans for production and costs were revealed:
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Pairs of shoes to be produced and sold
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55,000
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Standard cost per unit:
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|
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Direct materials
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$15
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Direct labor
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12
|
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VOH
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6
|
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FOH
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3
|
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Total unit cost
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$36
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During the year, a total of 50,000 units were produced and sold. The following actual costs were incurred:
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Direct materials
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$775,000
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VOH
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$310,000
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Direct labor
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590,000
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FOH
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180,000
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There were no beginning or ending inventories of raw materials. In producing the 50,000 units, 63,000 hours were worked, 5% more hours than the standard allowed for the actual output. Overhead costs are applied to production using direct labor hours.
Required:
1. Using a flexible budget, prepare a performance report comparing expected costs for the actual production with actual costs.
2. Determine the following: (a) Fixed overhead spending and volume variances and (b) Variable overhead spending and efficiency variances.