Fundamentals of Cost Accounting 3rd Edition by William N. Lanen, Shannon W. Anderson, Michael Maher

Exercise 53

Overhead Cost and Variance Relationships

Fargo Corporation reported a $400 favorable price variance for variable overhead and a $4,000 favorable price variance for fixed overhead. The flexible budget had $256,800 variable overhead based on 21,400 direct labor-hours; only 21,200 hours were worked. Total actual overhead was $434,800. The number of estimated hours for computing the fixed overhead application rate totaled 22,000 hours.

Required

a. Prepare a variable overhead analysis like the one in Exhibit 16.10.

---

b. Prepare a fixed overhead analysis like the one in Exhibit 16.13.

Step 1 of 3

a.?Variable overhead:

a$12	=	$256,800 flexible budget
		21,400 hours

b.?Fixed overhead:

a$180,800 = $434,800 – $254,000