Question

The Stanton Supply Co. produces cleaning equipment for professional cleaners. At the start of the year, Stanton estimated variable overhead costs to be $13 per unit and total fixed overhead costs at $300,000 based on a volume of 60,000 units. The detail for the overhead estimates follows:
Variable Overhead
Indirect material ($8) ........... $ 480,000
Utilities ($2) ................ 120,000
Maintenance ($3) .............. 180,000
Total variable overhead .......... $ 780,000
Fixed Overhead
Supervisor salaries .............. $ 125,000
Depreciation ............... 150,000
Other fixed overhead ............ 25,000
Total fixed overhead ............ $ 300,000
Total overhead costs ........... $1,080,000
Actual costs for the year are as follows:
Actual Production ............. 55,000 units
Variable Overhead
Indirect material ............. $ 467,500
Utilities ................. 95,000
Maintenance ............... 170,000
Total variable overhead .......... $ 732,500
Fixed Overhead
Supervisor salaries ........... $ 127,000
Depreciation .............. 145,000
Other fixed overhead ........... 26,000
Total fixed overhead ........... $ 298,000
Total overhead costs ........... $1,030,500

Required
Calculate the controllable overhead variances for variable and fixed overhead. As a manager with limited time, which variances would you focus on?



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  • CreatedSeptember 23, 2013
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