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:

Stare Decisis

A legal doctrine that obligates courts to follow the precedents established in previous rulings, ensuring consistency and predictability in the law.

Courts of Chancery

Courts that administer equity and handle matters such as trusts, estates, and guardianships, distinct from courts that deal with law.

Law of Equity

A branch of law that supplements common law by providing remedies and justice that are not available in traditional legal systems, focusing on fairness.

Common Law Courts

Courts that base their decisions on precedents or judicial rulings rather than written statutes.