Overhead spending and efficiency variances

Reference no: EM133483382

Case: At the beginning of the year, Goodman Company had the following standard cost sheet for one of its food products:

Direct materials: 10 kg @ 3.20 per kg

Direct labour: 4 hours @ $9.00 per hour

Fixed overhead: 4 hours @ $4.00 per hour

Variable overhead: 4 hours @ $0.75 per hour

The company computes its overhead rates using practical volume, which is 72,000 units. The actual results for the year are

Units produced 70,000

Direct labour hours 290,000

Actual wage per hour $9.05

Fixed overhead $1,160,000

Variable overhead $218,000

Required: Include detailed calculation including formulas and Indicate if Favourable or Unfavourable]

A. Compute the fixed overhead spending and volume variances.

B. Compute the variable overhead spending and efficiency variances.

Reference no: EM133483382

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