Question: Dvent budgets 18 000 machine hours for the production of computer

Dvent budgets 18,000 machine hours for the production of computer chips in August 2013. The budgeted variable overhead rate is $6 per machine-hour. At the end of August there is a $375 favourable rate variance for variable over head and a $1,575 unfavourable rate variance for fixed overhead. For the computer chips produced, 14,850 machine-hours are budgeted and 15,000 machine-hours are actually used. Total actual overhead costs are $120,000.
REQUIRED
1. Compute efficiency and flexible-budget variances for Dvent's variable overhead in August 2013. Will variable overhead be overallocated or underallocated? By how much?
2. Compute production-volume and flexible-budget variances for Dvent's fixed overhead in August 2013. Will fixed overhead be overallocated or underallocated? By how much?

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  • CreatedJuly 31, 2015
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