Straightforward calculation of overhead variances: manufacturer

The data below relate to Sporty Ltd, a manufacturer of exercise equipment, for August:

Standard variable overhead rate $27 per machine hour

Standard quality of machine hour 2 hours per unit of output

Budgeted fixed overhead $270 000

Budgeted output 15 000 units

Actual results for August are as follows:

Actual output 13 500 units

Actual variable overhead $757 350

Actual fixed overhead $274 500

Actual machine time 29 700 machine hours

Required:

Calculate the following variances, indicating whether each variance is favourable or unfavourable:

1. variable overhead spending variance

2. variable overhead efficiency variance

3. fixed overhead budget variance

4. fixed overhead volume variance.

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Answer rating: 100% (QA)

1Variable overhead spending varianceActual variable overheadActual hou... View the full answer