Hastings Company bases its variable overhead performance report on the actual direct labour- hours of the period.
Question:
Hastings Company bases its variable overhead performance report on the actual direct labour- hours of the period. Data concerning the most recent year, which ended on December 31, are as follows:
Budgeted direct labour-hours . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42,000
Actual direct labour-hours . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44,000
Standard direct labour-hours allowed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45,000
Cost formula (per direct labour-hour):
Indirect labour. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 0.90
Supplies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 0.15
Electricity. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 0.05
Actual costs incurred:
Indirect labour. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $42,000
Supplies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 6,900
Electricity. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,800
Required:
Prepare a variable overhead performance report using the format in Exhibit 10€“13. Compute both variable overhead spending and efficiency variances.
Exhibit 10-13
Step by Step Answer:
Managerial Accounting
ISBN: 978-1259024900
9th canadian edition
Authors: Ray Garrison, Theresa Libby, Alan Webb