Response to the following problem:
Variable overhead variances
In addition to the information for Acme Company in Mini-Exercises 1 and 2, the standard variable overhead rate per unit consists of $6 per machine hour and each unit is allowed a standard of 1 hour of machine time. During August, $122,760 of actual variable overhead cost was incurred for 19,800 machine hours.
Required: Calculate the variable overhead spending variance and the variable overhead efficiency variance.
Exercises 2:
Flexible budget and performance reporting
In addition to the information for Acme Company in Mini-Exercise 1, actual unit component costs incurred during August include direct materials, $8.25; direct labor, $9.45; variable overhead, $6.82. Actual fixed overhead was $33,500.
Required: Prepare a performance report, including each cost component, using the following headings:
|
Cost Component
|
Original Budget
|
Flexible Budget
|
Actual Cost
|
Budget Variance
|
Exercise 1:
Flexible budget
Acme Company's production budget for August is 17,500 units and includes the following component unit costs: direct materials, $8; direct labor, $10; variable overhead, $6. Budgeted fixed overhead is $32,000. Actual production in August was 18,000 units.
Required: Prepare a flexible budget that would be used to compare against actual production costs for August.