The Atlas Company Has Developed Standard Overhead Costs Based Upon

question 39

Essay

The Atlas Company has developed standard overhead costs based upon a capacity of 180,000 direct labor hours:
$\begin{array}{lrr}\text { Standard costs per unit: }\\ \text {Variable portion } & \text {2 hours@\$3= } &\$6\\ \text { Fixed portion } & \text { 2 hours@\$5= } &10\\&&\$16\\\end{array}$

During April, 85,000 units were scheduled for production; however, only 80,000 units were actually produced. The following data relate to April:
Actual direct labor cost incurred was $644,000 for 165,000 actual hours of work.
Actual overhead incurred totaled $1,378,000; $518,000 variable and $860,000 fixed.
All inventories are carried at standard cost.
Required:
(Be sure to indicate whether the variances are favorable or unfavorable and show your work.)
a. Compute the variable overhead price variance.
b. Compute the variable overhead efficiency variance.

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Definitions:

Stakeholder Commitment

The support and engagement of individuals or groups who have an interest in the success of a project, initiative, or organization.

Traditional Education

A form of learning that takes place in a structured educational system, typically involving face-to-face instruction in schools or universities.

Trial And Error

A problem-solving method involving repeated, varied attempts which are continued until success, or until the agent stops trying.

10-Step Process

A systematic approach or methodology broken down into ten sequential steps to achieve a specific goal or complete a task.