Reference no: EM132565633

Computing overhead variances the question or problem is: Grand Fender is a competitor of Pro Fender from exercise 23-19. Grand Fender also uses a standard cost system and provides the following information:

Static budget variable overhead $5,630 FOH Vol. $ 1,720 unfavorable

Static budget fixed overhead $ 22,520

Static budget direct labor hours 563 hours

Static budget number of units 21,000 units

Standard direct labor hours 0.026 Hours per fender

Grand Fender allocates manufacturing overhead to production based on standard direct labor hours. Grand Fender reported the following actual results for 2016:

actual number of fenders produced 20,000;

actual variable overhead, $ 5,200;

actual fixed overhead, $24,000; and

the actual direct labor hours $480.

Requirements:

Question 1: Compute the overhead variance for the year; variable overhead cost variance, variable overhead efficiency variance, fixed overhead cost variance and fixed overhead volume variance

Question 2: Explain why the variance are favorable or unfavorable.