Erie Co Uses Machine Hours to Apply Standard Overhead Cost to to Production

question 81

Essay

Erie Co. uses machine hours to apply standard overhead cost to production. The following data pertain to October: $\begin{array}{lr}\text { Master budget data: } & \\\text { Units } & 100,500 \\\text { Total machine hours (denominator volume) } & \$ 250,000 \\\text { Total variable overhead cost } & \$ 50,000\\\text { Actual operating results: }\\\text { Variable overhead cost incurred } & \$ 265,000 \\\text { Fixed overhead cost incurred } & \$ 54,000 \\\text { Units manufactured } & 2,250 \\\text { Total machine hours } & 96,000\end{array}$ Required:
Compute the following variances using machine hours as the activity variable used to assign standard overhead costs to production. Show calculations.
1. Variable overhead spending variance
2. Variable overhead efficiency variance
3. Fixed overhead spending variance
4. Fixed overhead production-volume variance

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Definitions:

Subatomic Particles

Particles smaller than atoms, including protons, neutrons, and electrons, which make up the atom's structure.

Electrons

Negatively charged particles present in every atom that function as the main conduits for electrical current in solid materials.

Neutrons

Neutrons are subatomic particles found in the nucleus of an atom; they have no electric charge and a mass slightly greater than that of protons.

Protons

Positively charged particles located within an atom's nucleus, contributing to the atom's overall charge and mass.