Sedona Company set the following standard costs for one unit of its product for this year....

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Sedona Company set the following standard costs for one unit of its product for this year. Direct material (30 pounds @ $2.50 per pound) Direct labor (20 hours @ $4.60 per DLH) Variable overhead (20 hours @ $2.50 per DLH) Fixed overhead (20 hours @ $1.10 per DLH) Standard cost per unit $ 75.00 92.00 50.00 22.00 $ 239.00 The $3.60 ($2.50 + $1.10) total overhead rate per direct labor hour (DLH) is based on a predicted activity level of 39,000 units, which is 65% of the factory's capacity of 60,000 units per month. The following monthly flexible budget information is available. Flexible Budget Budgeted production (units) Budgeted direct labor (standard hours) Budgeted overhead Variable overhead Fixed overhead Total overhead Operating Levels (% of capacity) 60% 65% 70% 36,000 720,000 39,000 780,000 42,000 840,000 $ 1,800,000 858,000 $ 2,658,000 $ 1,950,000 858,000 $ 2,808,000 $ 2,100,000 858,000 $ 2,958,000 During the current month, the company operated at 60% of capacity, direct labor of 690,000 hours were used, and the following actual overhead costs were incurred. Actual variable overhead Actual fixed overhead $ 1,750,000 910,000 Actual total overhead $ 2,660,000 Exercise 21-27A (Algo) Computing total variable and fixed overhead variances LO P5 1. Compute the total variable overhead variance and identify it as favorable or unfavorable. (Indicate the effect of the variance by selecting favorable, unfavorable, or no variance.) 2. Compute the total fixed overhead variance and identify it as favorable or unfavorable. (Indicate the effect of the variance by selecting favorable, unfavorable, or no variance.) --At 60% of Operating Capacity- Standard Direct Labor Hours Overhead Rate Favorable/Unfavorable Standard Direct Labor Hours Standard Overhead Applied Actual Overhead Overhead Variance Variable overhead variance Fixed overhead variance $ 2.50 1.10 910,000 Sedona Company set the following standard costs for one unit of its product for this year. Direct material (30 pounds @ $2.50 per pound) Direct labor (20 hours @ $4.60 per DLH) Variable overhead (20 hours @ $2.50 per DLH) Fixed overhead (20 hours @ $1.10 per DLH) Standard cost per unit $ 75.00 92.00 50.00 22.00 $ 239.00 The $3.60 ($2.50 + $1.10) total overhead rate per direct labor hour (DLH) is based on a predicted activity level of 39,000 units, which is 65% of the factory's capacity of 60,000 units per month. The following monthly flexible budget information is available. Flexible Budget Budgeted production (units) Budgeted direct labor (standard hours) Budgeted overhead Variable overhead Fixed overhead Total overhead Operating Levels (% of capacity) 60% 65% 70% 36,000 720,000 39,000 780,000 42,000 840,000 $ 1,800,000 858,000 $ 2,658,000 $ 1,950,000 858,000 $ 2,808,000 $ 2,100,000 858,000 $ 2,958,000 During the current month, the company operated at 60% of capacity, direct labor of 690,000 hours were used, and the following actual overhead costs were incurred. Actual variable overhead Actual fixed overhead $ 1,750,000 910,000 Actual total overhead $ 2,660,000 Exercise 21-27A (Algo) Computing total variable and fixed overhead variances LO P5 1. Compute the total variable overhead variance and identify it as favorable or unfavorable. (Indicate the effect of the variance by selecting favorable, unfavorable, or no variance.) 2. Compute the total fixed overhead variance and identify it as favorable or unfavorable. (Indicate the effect of the variance by selecting favorable, unfavorable, or no variance.) --At 60% of Operating Capacity- Standard Direct Labor Hours Overhead Rate Favorable/Unfavorable Standard Direct Labor Hours Standard Overhead Applied Actual Overhead Overhead Variance Variable overhead variance Fixed overhead variance $ 2.50 1.10 910,000

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