Ferguson Farrar Limited is a manufacturing company. For the month of April 20X3 it budgeted for 4000 units of production, each to use 1.5 hours of machine time. Production overhead absorption rates were budgeted as follows:

 The actual level of production in the month was 4200 units. The original production overhead budget, the flexed budget and the actual expenditure are shown in the following table:

 Calculate:

a) the variable production overhead variance

b) the fixed production overhead variance.

Transcribed Image Text:

Variable production overhead = £4 per machine hour. Fixed production overhead = £8 per machine hour. Variable production overhead = £4 per machine hour. Fixed production overhead = £8 per machine hour.

Answer rating: 100% (QA)

ANSWER a The variable production overhead variance is 1250 favorable b The fixed produc... View the full answer