Problem:
Layt Clock Company has developed the following flexible budget for its overhead costs. Manufacturing overhead at Layt is applied to production on the basis of standard machine-hours:
|
|
Machine Hours
|
|
|
21,600
|
24,000
|
26,400
|
|
Clocks produced..................
|
18,000
|
20,000
|
22,000
|
|
Variable overhead cost.........
|
$127,440
|
$141,600
|
$155,760
|
|
Fixed overhead cost.............
|
$171,072
|
$171,072
|
$171,072
|
Layt was expecting to produce 22,000 clocks last year. The actual results for the year were as follows:
|
Number of clocks produced..........
|
21,500
|
|
Machine-hours incurred.................
|
24,940
|
|
Variable overhead cost..................
|
$145,899
|
|
Fixed overhead cost......................
|
$170,540
|
Questions:
1. What is the Variable Overhead Spending Variance?
2. What is the Variable Overhead Efficiency Variance?
3. What is the Fixed Overhead Budget Variance?
4. What is the Fixed Overhead Volume Variance?
5. What is the TOTAL Manufacturing Overhead Variance?