The standard variable overhead application rate

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Reference no: EM131721227

Marshall Co. uses a standard cost system. The following budget was prepared for the year:

Standard direct labor hours (DHLs) 32,400

Budgeted Variable factory overhead cost $168,480

Total factory overhead rate per DLH $18.70

The standard calls for four DLHs per unit manufactured. During the year, Marshall worked 33,600 DLHs to manufacture 8,500 units. The actual factory overhead was $12,000 greater than the flexible-budget amount for the units produced, of which $5,000 was due to fixed factory overhead.

Calculate (and provide details for) each of the following variances:

1. The standard variable overhead application rate

2. The variable overhead efficiency variance

3. The total overhead spending variance

4. The overhead production volume variance

5. The variable overhead spending variance

6. Provide a general interpretation for each of the following variances:

i. Variable overhead efficiency

ii. Total overhead spending

iii. Overhead production volume variance

Reference no: EM131721227

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