Asked by Rawynsk Silva on May 17, 2024
Verified
Creger Corporation, which makes landing gears, has provided the following data for a recent month:
Required: Determine the rate and efficiency variances for the variable overhead item supplies and indicate whether those variances are favorable or unfavorable.
Rate Variances
Differences between the standard or expected rates of costs and the actual rates incurred, often analyzed in cost accounting.
Variable Overhead
Refers to the costs that fluctuate with changes in production volume, such as utilities or materials that are consumed directly as a result of manufacturing activities.
- Implement the variable overhead costs on products and calculate the variances in variable overheads.
Verified Answer
DC
Donna CarrollMay 18, 2024
Final Answer :
Variable overhead rate variance = (Actual hours × Actual rate) − (Actual hours × Standard rate)= ${{[v(6)]:#,###}} − ({{[v(5)]:#,###}} hours × ${{[v(3)]:#,###.00}} per hour)= ${{[v(6)]:#,###}} − ${{[v(8)]:#,###}}= ${{[v(9)]:#,###}} FavorableStandard machine-hours allowed for the actual output = {{[v(2)]:#,###.0}} hours per unit × {{[v(4)]:#,###}} units = {{[v(11)]:#,###}} hoursVariable overhead efficiency variance = (Actual hours − Standard hours) × Standard rate= ({{[v(5)]:#,###}} hours − {{[v(11)]:#,###}} hours) × ${{[v(3)]:#,###.00}} per hour= ({{[v(12)]:#,###}} hours) × ${{[v(3)]:#,###.00}} per hour= ${{[v(13)]:#,###}} Unfavorable
Learning Objectives
- Implement the variable overhead costs on products and calculate the variances in variable overheads.
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