Basic Overhead Variances Derf Company Applies Overhead on the Basis of Direct Labor

question 1

Essay

Basic Overhead Variances
Derf Company applies overhead on the basis of direct labor hours.Two direct labor hours are required for each product unit.Planned production for the period was set at 9,000 units.Manufacturing overhead for the period is budgeted at $135,000,of which 20 percent is fixed.The 17,200 hours worked during the period resulted in production of 8,500 units.Manufacturing overhead cost incurred was $136,500.
Required:
Calculate the following three overhead variances:
a.Overhead volume variance.
b.Overhead efficiency variance.
c.Overhead spending variance.

---

Definitions:

Managerial Support

Assistance and empowerment provided by managers to their teams or individual subordinates to help them achieve work-related goals.

Business Case

A business case is a document or argument that details the justification for the initiation of a project or task, outlining the benefits, costs, and risks.

Grassroots Change

Change that originates from the bottom up within an organization or society, often driven by the collective action of its members rather than by leadership.

Top Management

The highest level of executives and administrators in an organization, responsible for strategic decisions and overall operations.