3. Variable overhead spending variance:
Variable overhead spending variance = (AH × AR) – (AH × SR)
($185,600) – (64,000 hours × $3 per hour) = $6,400 F
Variable overhead efficiency variance:
Variable overhead efficiency variance = SR (AH – SH)
$3 per hour (64,000 hours – 63,000 hours) = $3,000 U
The fixed overhead variances would be as follows:
Actual Fixed
Overhead Cost Budgeted Fixed
Overhead Cost Fixed Overhead Cost Ap-
plied to Work in Process
$302,400 $300,000* 63,000 hours × $5 per hour
= $315,000
↑ ↑ ↑
Budget Variance,
$2,400 U Volume Variance,
$15,000 F
*As originally budgeted. This figure can be expressed as:
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