1 answer

Rondell Company uses a standard cost system. Indirect costs were budgeted at $196,000 plus $15 per...

Question:

Rondell Company uses a standard cost system. Indirect costs were budgeted at $196,000 plus $15 per direct labour hour. The ov

Rondell Company uses a standard cost system. Indirect costs were budgeted at $196,000 plus $15 per direct labour hour. The overhead rate is based on 9,800 hours. Actual results were: Standard direct labour hours allowed 8,780 Actual direct labour hours Fixed overhead Variable overhead 9,800 $189,200 $183,600 Calculate the fixed overhead production volume variance Fixed overhead production volume variance Calculate the variable overhead spending variance. Variable averhead spending variance Calculate the varlable overhead efficlency variance. Variable overhead efficiency variance Calculate the over- or underapplied overhead

Answers

SOLUTION

1. Fixed overhead volume variance = Applied Fixed overhead - Budgeted fixed overhead

= ($20*8,780) - 196,000

= $175,600 - 196,000 = $20,400 F

Fixed overhead rate = 196,000/9,800 = $20

2. Variable overhead Spending Variance = Actual variable overhead - (Actual hours * standard rate)

= $183,600 - (9,800 * $15)

= $183,600 - $147,000 = $36,600 U

3. Variable overhead Efficiency Variance = Standard rate*(Actual hours - standard hours allowed)

= $15 * (9,800 - 8,780)

= $15 * 1,020 = $15,300 U

4.

Particulars Amount ($)
Actual overhead (189,200+183,600) 372,800
Applied overhead (9,800*15)+(8,780*$20) 322,600
Overhead Over applied 50,200
.

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