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

Exercise 38

Overhead Variances

Three Bridges, Inc., shows the following overhead information for the current period:

Actual overhead incurred	$638,400 ($182,400 fixed and $456,000 variable)
Budgeted fixed overhead	$187,200 (12,000 direct labor-hours budgeted)
Standard variable overhead rate per direct labor-hour	$36
Standard hours allowed for actual production	14,000 hours
Actual labor-hours used	13,200 hours

Required

What are the variable overhead price and efficiency variances and the fixed overhead price variance?

Step 1 of 3

Formula to calculate variable overhead price variance

Calculation of variable overhead price variances

Thus, variable overhead price variance is $19,200 U.