# 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

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