At the Beginning of the Year, Goodman Company Had the Following

question 138

Essay

At the beginning of the year, Goodman Company had the following standard cost sheet for one of its food products: $\begin{array}{lr}\text { Direct materials ( } 10 \mathrm{~kg} @ 3.20 \text { per kilogram) } & \$ 32.00 \\\text { Direct labour (4 hours }(\$ 9.00 \text { per hour) } & 36.00 \\\text { Fixed overhead (4 hours }(\$ 4.00 \text { per hour) } & 16.00 \\\text { Variable overhead (4 hours }(\omega, \$ 0.75 \text { per hour) } & 3.00\\\text { Standard cost per unit }&\$87.00\end{array}$ The company computes its overhead rates using practical volume, which is 72,000 units. The actual results for the year are: $$\begin{array} { l r } \text { Units produced } & 70,000 \\\text { Direct labour hours } & 290,000 \\\text { Actual wage per hour } & \$ 9.05 \\\text { Fixed overhead } & \$ 1,160,000 \\\text { Variable overhead } & \$ 218,000\end{array}$$ Required:
A. Compute the fixed overhead spending and volume variances.
B. Compute the variable overhead spending and efficiency variances.

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Definitions:

DfA

Stands for "Design for All", which is an approach to design that aims to make products and environments accessible to as many people as possible, regardless of age, ability, or status.

DfWG

Degrees of Freedom Within Groups, a term used in statistics to describe the number of independent values or quantities which can vary in the analysis without violating any given constraints.

Mean Square

A measure used in ANOVA that is calculated by dividing the sum of squares by its degrees of freedom.