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What are the major weaknesses of static budgets

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Question - The Duvall Company applies manufacturing overhead costs to products on the basis of direct labor-hours. The standard cost card shows that 6 direct labor-hours are required per unit of product. The company estimated that it would work 180,000 direct labor-hours and incur the following manufacturing overhead costs for the month of March:

Total fixed overhead costs $237,600

Total variable overhead costs $198,000

During March, the company completed 28,000 units of product, worked 172,000 direct labor-hours, and incurred the following total manufacturing overhead costs:

Total fixed overhead costs $230,600

Total variable overhead costs $197,800

The denominator activity used to calculate its predetermined overhead rate was 180,000 direct labor-hours.

Part (a) What is the variable overhead (VOH) spending variance for March?

Part (b) What is the variable overhead (VOH) efficiency variance for March?

Part (c) What is the fixed overhead budget variance for March?

Part (d) What is the fixed overhead volume variance for March?

Part (e) What are the major weaknesses of static budgets?

Reference no: EM131754750

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