The Following Standard Overhead Costs Were Developed for One of the Products

question 20

Essay

The following standard overhead costs were developed for one of the products of Windrun Company: $\begin{array}{llr}\text { Variable overhead: } & 5 \text { hours } \times \$ 4 \text { per hour } & 20.00 \\\text { Fixed overhead: } & 5 \text { hours } \times \$ 15 \text { per hour } & 75.00 \\\text { Total standard overhead cost per unit } & & \$ 95.00\end{array}$ The following information is available regarding the company's operations for the period: $\begin{array}{ll}\text { Units produced } & 20,000 \\\text { Direct labour } & 115,000 \text { hours } \\\text { Overhead incurred: } & \\\text { Variable } & \$ 437,500 \\\text { Fixed } & \$ 1,320,000\end{array}$ Budgeted fixed overhead for the period is $1,350,000,and the standard fixed overhead rate is based on expected capacity of 90,000 direct labour hours.
Required: A. Calculate the variable overhead spending variance and indicate whether it is favourable or unfavourable.
B. Calculate the variable overhead efficiency variance and indicate whether it is favourable or unfavourable.
C. Calculate the fixed overhead spending variance and indicate whether it is favourable or unfavourable.
D. Calculate the fixed overhead volume variance and indicate whether it is favourable or unfavourable.

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Definitions:

Chief Financial Officers

Senior executives responsible for managing the financial actions of a company, including financial planning, risk management, and reporting.

Certify Accuracy

To officially affirm or validate the truthfulness and correctness of information or data.

Sarbanes-Oxley Act

A federal law established in the United States in 2002 that aims to safeguard investors through the enhancement of the precision and dependability of company reports.

Outside Directors

Board members who are not part of the company's day-to-day operations, providing independent oversight and insight.