Hunters,Inc.uses a standard cost system when accounting for its sole product.Manufacturing overhead is applied to production on the basis of process hours.Planned activity is 60,000 process hours per month,which gives rise to the following per-unit standards:
Variable overhead: 13 hours at $15 per hour
Fixed overhead: 13 hours at $7 per hour
During September,5,100 units were produced and the company incurred the following overhead costs: variable,$942,500;fixed,$429,000.Actual process hours totaled 65,000.
Required:
A.Calculate the spending and efficiency variances for variable overhead.
A.Spending variance: $942,500 - (65,000 * $15)= $32,500F
Efficiency variance: (65,000 * $15)- (5,100 * 13 * $15)= $19,500F
B.Budget variance: $429,000 - (60,000 * $7)= $9,000U
Volume variance: (60,000 * $7)- (5,100 * 13 * $7)= $44,100F*
*Some accountants choose to label a negative volume variance as "favorable," while others prefer to omit the unfavorable/favorable label altogether.
B.Calculate the budget and volume variances for fixed overheaD.

Question

Quizplus · Accepted Answer

The Answer of Hunters,Inc.uses a standard cost system when accounting for its sole product.Manufacturing overhead is applied to production on the basis of process hours.Planned activity is 60,000 process hours per month,which gives rise to the following per-unit standards:
Variable overhead: 13 hours at $15 per hour
Fixed overhead: 13 hours at $7 per hour
During September,5,100 units were produced and the company incurred the following overhead costs: variable,$942,500;fixed,$429,000.Actual process hours totaled 65,000.
Required:
A.Calculate the spending and efficiency variances for variable overhead.
A.Spending variance: $942,500 - (65,000 * $15)= $32,500F
Efficiency variance: (65,000 * $15)- (5,100 * 13 * $15)= $19,500F
B.Budget variance: $429,000 - (60,000 * $7)= $9,000U
Volume variance: (60,000 * $7)- (5,100 * 13 * $7)= $44,100F*
*Some accountants choose to label a negative volume variance as "favorable," while others prefer to omit the unfavorable/favorable label altogether.
B.Calculate the budget and volume variances for fixed overheaD.