Lancaster Ltd Required:
A

question 47

Essay

Lancaster Ltd.produces a unique item.Lancaster's management team wishes to perform a variance analysis on its fixed overhead.Fixed overhead is applied to units produced using direct labour hours as its cost driver.The company's managerial accountant has compiled the following information:
$\begin{array}{lr}\underline{\text { Prniected data: }}\\\text { Estimated direct labour hours } & 40000 \text { hour } \\\text { Estimated fixed overhead } & \$ 90000\end{array}$

$\begin{array}{lr}\underline{\text { Actual data: }}\\ \text { Actual production } & \text { 300000 units } \\ \text { Actual direct labour hours used} & \text { 50000 hours } \\ \text { Actual fixed nverhead } &\$100000\\\end{array}$
Required:
A. Compute the fixed overhead spending variance
B. Compute the fixed overhead volume variance.

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Definitions:

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