Actual production 11,620 packages Budgeted production 12,500 packages Standard direct labor hours 1.52 direct labor hours per package Actual direct labor hours 18,731 Standard variable overhead rate $3 per direct labor hour Actual variable overhead costs $47,743. Calculate the variable overhead spending and efficiency variances.

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Business

Khloe Guzman

17 September, 12:05

Actual production 11,620 packages Budgeted production 12,500 packages Standard direct labor hours 1.52 direct labor hours per package Actual direct labor hours 18,731 Standard variable overhead rate $3 per direct labor hour Actual variable overhead costs $47,743. Calculate the variable overhead spending and efficiency variances.

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Nathaly Terry · Answer 1

8,450 Favorable; 3,206 Unfavorable

Explanation:

Variable overhead spending variance:

= (Standard rate - Actual rate) * Actual hours

= ($3 * 18,731) - $47,743

= 8,450 Favorable

Variable overhead efficiency variance:

= (Standard hour - Actual hour) * Standard rate

= [ (11,620 * 1.52) - 18,731] * $3

= (-1,068.6) * $3

= 3,206 Unfavorable