Question

Compute the overhead variances for the​ year: variable overhead cost​ variance, variable overhead efficiency​ variance, fixed overhead cost​ variance, and fixed overhead volume variance

Answer 1

a) VOH Cost variance = Actual cost - (Std cost per hr X Actual hrs worked)

= 10700 - [ (8000/1600) X (6900*0.25)]

10700 - [ 5 x 1725] = 10700-8625 = 2075 (A)

b) VOH Efficiency variance = (Actual hours - Std hours allowed) X Std price

= [(6900 x 0.25) - (0.4 x 6900)] x (8000/1600) = 5175 (A)

c) FOH Cost variance = Actual OH - Budgeted OH = 2840- [3200/4000] x 6900 = 2680 (F)

d) FOH Volume variance = Budgeted OH - Allocated OH = [1600- (0.25 X 6900)] x 3200/1600 = 250 (F)

Things to hep:

1) c is supposed to read: [ c) FOH Cost variance = Actual OH - Budgeted OH = 2840- [ (3200/4000) x 6900 ] = 2680 (F)

2) 2840 - [ (3200/4000) x 6900 ] = 2680 (F)