Reference no: EM132500309

Question 1: Calculating overhead variances

Mills, Inc. is a competitor of Murry, Inc. from Exercise E23-18. Mills also uses a standard cost system and provides the following information:

Static budget variable overhead $ 1,200

Static budget fixed overhead $ 1,600

Static budget direct labor hours 800 hours

Static budget number of units 400 units

Standard direct labor hours 2 hours per unit

Mills allocates manufacturing overhead to production based on standard direct labor hours. Mills reported the following actual results for 2018:

actual number of units produced, 1,000;

actual variable overhead, $4,000;

actual fixed overhead, $3,100;

actual direct labor hours, 1,600.