Exercise $11-16$ Variable Overhead Variances, Service Company

Travel Smooth Inc. operates a travel service for corporate clients. The corporation has a team of client advisors and has developed an online system to reserve and coordinate client travel plans efficiently. Travel Smooth has gathered the following actual data on last year$$s operations:

Client trip reservations

$6,700$

Direct labour

$9,800$ direct labour hours @ $$20\mathrm{.}00$

Actual variable overhead

$$103,640$

Travel Smooth employs a standard costing system. During the year, a variable overhead rate of $$9\mathrm{.}80$ per hour was used. The labour standard requires $1\mathrm{.}4$ hours per reservation.

Required:

$1.$ Compute the standard hours allowed for actual reservations made last year.

$2.$ Compute the variable overhead spending and efficiency variances.

Exercise $11-17$ Fixed Overhead Variances

Refer to Exercise $11-16.$ Assume that the actual fixed overhead was $$199,600.$ Budgeted fixed overhead was $$198,000,$ based on practical capacity of $11,000$ direct labour hours.

Required:

$1.$ Calculate the standard fixed overhead rate based on budgeted fixed overhead and practical capacity.

$2.$ Compute the fixed overhead spending and volume variances.