The following data are the actual results for Marvelous Marshmallow Company for October.
Actual output ................................................................................................................................. 9,000 cases
Actual variable overhead ................................................................................................................ $405,000
Actual fixed overhead ..................................................................................................................... $122,000
Actual machine time ...................................................................................................................... 40,500 machine hours
Standard cost and budget information for Marvelous Marshmallow Company follows:
Standard variable-overhead rate .................................................................................... $9.00 per machine hour
Standard quantity of machine hours ............................................................................... 4 hours per case of marshmallows
Budgeted fixed overhead ............................................................................................... $120,000 per month
Budgeted output ........................................................................................................... 10,000 cases per month
Required:
1. Use any of the methods explained in the chapter to compute the following variances. Indicate whether each variance is favorable or unfavorable, where appropriate.
a. Variable-overhead spending variance.
b. Variable-overhead efficiency variance.
c. Fixed-overhead budget variance.
d. Fixed-overhead volume variance.
2. Build a spreadsheet:
Construct an Excel spreadsheet to solve the preceding requirement. Show how the solution will change if the following information changes: actual output was 9,100 cases, and actual variable overhead was $395,000.