Reference no: EM132967424
ABC Company produces cases of frozen food. During May, the company produced 1 500 cases of food and incurred the following actual costs:
Variable overhead $ 15 000
Fixed overhead $ 27 000
Actual direct labour cost (8 000 direct labour hours) 151 200
Actual material cost (30 000 kilograms purchased and used) 66 000
Standard cost and annual budget information is as follows:
Standard cost per case
Direct labour (5 hours @ $18) $ 90.00
Direct material (20 kilograms @ $2) 40.00
Variable overhead (5 hours @ $1.50) 7.50
Fixed overhead (5 hours @ $3) 15.00
total $152.50
Annual budget information
Variable overhead $150 000
Fixed overhead $300 000
Planned activity for year 100 000 direct labour hours
Required:
Problem 1: Calculate the following variances, indicating whether each variance is favourable or unfavourable:
1. Variable overhead spending variance?
2. Variable overhead efficiency variance?
3. Fixed overhead budget variance?
4. Fixed overhead volume variance?