A company provided the following information: Standard fixed overhead rate (SFOR) per direct labour hour $7.00 Actual
Question:
A company provided the following information:
Standard fixed overhead rate (SFOR) per direct labour hour $7.00
Actual fixed overhead rate (AFOR) per direct labour hour $6.95
Actual direct labour hours worked (AH) 36,100
Actual production in units 12,000
Standard hours allowed for actual units produced (SH) 36,000
Required:
Using the columnar approach, calculate the fixed overhead spending and efficiency variances.
(MY WORK)
Columnar Approach:
Fixed Overhead Spending Variance
= (Actual Fixed Overhead Rate-Standard Fixed overhead Rate) * Actual direct labour hours worked
= (AFOR-SFOR) *AH
= (6.95-7.00)*36,100
= -$ 1,805 ( Favorable)
The AFOR is lower than the SFOR resulting in cost savings.
NEED HELP WITH THE FOLLOWING:
1. Using the formula approach, calculate the fixed overhead spending variance.
2. Using the formula approach, calculate the fixed overhead efficiency variance.
3. Calculate the total fixed overhead variance.
Cornerstones of Managerial Accounting
ISBN: 978-0176530884
2nd Canadian edition
Authors: Maryanne M. Mowen, Don Hanson, Dan L. Heitger, David McConomy, Jeffrey Pittman