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

question 78

Essay

The following standard overhead costs were developed for one of the products of Windrun Company: $\begin{array}{llc}\text { Variable overhead: } & 5 \text { hours } \times \$ 4 \text { per hour } & 20.00 \\\text { Fixed overhead: } & 5 \text { hours } \times \$ 15 \text { perhour } & 75.00\\\text { Total standard overhead cost per unit }&&\$95.00\end{array}$ The following information is available regarding the company's operations for the period: $\begin{array}{lr}\text { Units produced } & 20,000 \\\text { Direct labour } & 115,000 \text { hours } \\\text { Overhead incurred: } & \\\text { Variable } & \$ 437,500 \\\text { Fixed } & \$ 1,320,000\end{array}$ 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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