Solution-Compute the variable overhead spending variance

Compute the variable overhead spending variance

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Reference no: EM132780741

Question - Orville Company's standard and actual costs per unit are provided below for the most recent period. During this time period 640 units were actually produced.

Standard Actual

Materials: Standard: 2.4 metres at $2.5 per m. $6.00

Actual: 2.1 metres at $2.60 per m. $5.46

Direct labour:

Standard: 1.5 hrs. at $8.30 per hr. 12.45

Actual: 1.7 hrs. at $8.50 per hr. 14.45

Variable overhead:

Standard: 1.5 hrs. at $4.60 per hr. 6.90

Actual: 1.7 hrs. at $4.20 per hr. 7.14

Total unit cost $25.35 $27.05

For simplicity, assume there was no inventory of materials at the beginning or end of the period.

Given the information above, compute the following variances. Also indicate if the variances are favorable or unfavorable.

1. Materials price variance

2. Materials quantity variance

3. Direct labour rate variance

4. Direct labour efficiency variance

5. Variable overhead efficiency variance

6. Variable overhead spending variance

Reference no: EM132780741

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Compute the variable overhead spending variance

Reference no: EM132780741

Reference no: EM132780741

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