Reference no: EM131728705

Alden Company uses a two-variance analysis for overhead variances. Practical capacity is defined as 28 setups and 28,000 machine hours to manufacture 5,600 units for the year. Selected data for 2016 follow:

Budgeted fixed factory overhead:
Setup $ 61,600
Other 148,000
$ 209,600
Total factory overhead incurred $ 482,000
Variable factory overhead rate:
Per setup $ 450
Per machine hour $ 7

Total standard machine hours allowed for the units manufactured 31,000 hours
Machine hours actually worked 34,000 hours
Actual total number of setups 24

1.Compute (a) the total overhead spending variance, (b) the overhead efficiency variance, and (c) the total overhead flexible - budget variance for 2016.

2. Assume that the company includes all set up costs as variable factory overhead. The budgeted total fixed overhead, therefore, is $156,000, and the standard variable overhead rate per set up is $3,650. What are the (a) overhead spending, (b) efficiency, and (c) flexible budget variances for the year?

3. Assume that the company uses only machine hours as the activity measure to apply both variable and fixed overhead, and that it includes all setup costs as variable factory overhead. What is the (a) overhead spending variance, (b) efficiency variance, and (c) flexible-budget variance for the year?