# Otago Stationery Company manufactures cardboard folders. The company has developed standard overhead rates based on a monthly capacity of 180

## Question:

Otago Stationery Company manufactures cardboard folders. The company has developed standard overhead rates based on a monthly capacity of 180 000 direct labour hours (DLHs) as follows:

Standard costs per unit (one box of folders):

Variable overhead (2 hours • \$3 per DLH) .......................... \$ 6

Fixed overhead (2 hours • \$5 per DLH) .............................. 10

Total ...................................................................... \$16

During April, 90 000 units were budgeted for production; however, only 80 000 units were produced. The following data relate to April:

■ Actual direct labour cost incurred was \$1567 500 for 165 000 actual hours of work.

■ Actual overhead incurred totalled \$1 371 300, of which \$511 500 was variable and \$860 000 was fixed.

Required:

Prepare two exhibits, similar to Exhibits 05 and 11.6 in the chapter, showing the following variances. State whether each variance is favourable or unfavourable.

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Related Book For

## Management Accounting

ISBN: 9781760421144

7th Edition

Authors: Kim Langfield Smith, Helen Thorne, David Alan Smith, Ronald W. Hilton

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