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

Exercise 51

Overhead Variances

Lima Parts, Inc., shows the following overhead information for the current period:

Actual overhead incurred	$58,800, 2/3 of which is variable
Budgeted fixed overhead	$17,280
Standard variable overhead rate per
direct labor-hour	$18
Standard hours allowed for
actual production	2,350 hours
Actual labor-hours used	2,200 hours

Required

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

Step 1 of 5

Cost accounting

This system is designed for inhouse or internal managers and their decision making. Cost accounting information is not needed for comparison with other companies. This information is commonly used in financial accounting also, but it is primarily used by company managers for their decision making. It is important that cost accounting information is relevant for the decision making of the manager.