Question

Furniture, Inc., specializes in the production of futons. It uses standard costing and flexible budgets to account for the production of a new line of futons. For 2011, budgeted variable overhead at a level of 3,600 standard monthly direct labor-hours was $43,200; budgeted total overhead at 4,000 standard monthly direct labor-hours was $103,400. The standard cost allocated to each output included a total overhead rate of 120% of standard direct labor costs. For October, Furniture, Inc., incurred total overhead of $120,700 and direct labor costs of $128,512. The direct labor price variance was $512 unfavorable. The direct labor flexible-budget variance was $3,512 unfavorable. The standard labor price was $25 per hour. The production-volume variance was $34,600 favorable.
Required
1. Compute the direct labor efficiency variance and the spending and efficiency variances for overhead. Also, compute the denominator level.
2. Describe how individual variable overhead items are controlled from day to day. Also, describe how individual fixed overhead items are controlled.



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  • CreatedNovember 12, 2011
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