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:

Defined Contribution Pension Plan

A type of retirement plan in which an employer, employee, or both make contributions on a regular basis, but the future benefit received by the employee depends on the plan's investment performance.

Vacation Pay

Compensation for employees for time not worked due to vacation, as mandated by organizational policies or labor laws.

Pension Benefit

A retirement plan that specifies the amount of payment an employee will receive upon retirement, based on factors like years of service and salary history.

Accrued Product Warranty Expense

An expense that represents the estimated cost of warranty claims on products sold that have not yet been claimed.