Reference no: EM132143470

Alden Company uses a two-variance analysis for overhead variances. Practical capacity is defined as 32 setups and 32,000 machine hours to manufacture 6,400 units for the year. Selected data for 2016 follow: Budgeted fixed factory overhead: Setup $ 64,000 Other 200,000 $ 264,000 Total factory overhead incurred $ 480,000 Variable factory overhead rate: Per setup $ 600 Per machine hour $ 5 Total standard machine hours allowed for the units manufactured 30,000 hours Machine hours actually worked 35,000 hours Actual total number of setups 28 Required: 1. Compute (a) the total overhead spending variance, (b) the overhead efficiency variance, and (c) the total overhead flexible-budget variance for 2016. 2. Assume that the company includes all setup costs as variable factory overhead. The budgeted total fixed overhead, therefore, is $200,000, and the standard variable overhead rate per setup is $2,600. What are the (a) overhead spending, (b) efficiency, and (c) flexible-budget variances for the year? 3. Assume that the company uses only machine hours as the activity measure to apply both variable and fixed overhead, and that it includes all setup costs as variable factory overhead. What is the (a) overhead spending variance, (b) efficiency variance, and (c) flexible-budget variance for the year? References