Tyrant Enterprises, Inc. uses a standard cost system when accounting for its sole product. Manufacturing overhead is applied to production on the basis of process hours. Planned activity is 60,000 process hours per month, which gives rise to the following per-unit standards:
Variable overhead: 13 hours at $15 per hour
Fixed overhead: 13 hours at $7 per hour
During September, 5,100 units were produced and the company incurred the following overhead costs: variable, $942,500; fixed, $429,000. Actual process hours totaled 65,000.
Required:
A. Calculate the spending and efficiency variances for variable overhead.
B. Calculate the budget and volume variances for fixed overhead.

Question

Tyrant Enterprises, Inc. uses a standard cost system when accounting for its sole product. Manufacturing overhead is applied to production on the basis of process hours. Planned activity is 60,000 process hours per month, which gives rise to the following per-unit standards:
Variable overhead: 13 hours at $15 per hour
Fixed overhead: 13 hours at $7 per hour
During September, 5,100 units were produced and the company incurred the following overhead costs: variable, $942,500; fixed, $429,000. Actual process hours totaled 65,000.
Required: 
A. Calculate the spending and efficiency variances for variable overhead.
B. Calculate the budget and volume variances for fixed overhead.

Quizplus · Accepted Answer

The Answer of Tyrant Enterprises, Inc. uses a standard cost system when accounting for its sole product. Manufacturing overhead is applied to production on the basis of process hours. Planned activity is 60,000 process hours per month, which gives rise to the following per-unit standards:
Variable overhead: 13 hours at $15 per hour
Fixed overhead: 13 hours at $7 per hour
During September, 5,100 units were produced and the company incurred the following overhead costs: variable, $942,500; fixed, $429,000. Actual process hours totaled 65,000.
Required: 
A. Calculate the spending and efficiency variances for variable overhead.
B. Calculate the budget and volume variances for fixed overhead.