Grand Fender is acompetitor of Pro Fender. Grand Fender also uses a standard cost system and provides
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Question:
Grand Fender is acompetitor of Pro Fender. Grand Fender also uses a standard cost system and provides the following information:
Static budget variable overhead | $5,630 |
Static budget fixed overhead | $22,520 |
Static budget direct labor hours | 563 hours |
Static budget number of units | 21,000 units |
Standard direct labor hours | 0.026 hours per fender |
Grand Fender allocates manufacturing overhead to production based on standard direct labor hours. Grand Fender reported the following actual results for 2016: actual number of fenders produced, 20,000; actual variable overhead, $5,200; actual fixed overhead, $24,000; actual direct labor hours, 480.
Requirements
1. Compute the overhead variance for the year: variable overhead cost variance, variable overhead efficiency variance, fixed overhead cost variance, and fixed overhead volume variance.
2. Explain why the variances are favorable or unfavorable
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