Cost Management: A Strategic Emphasis 5th Edition by David Stout, Edward Blocher, Gary Cokins

Exercise 35

Two-Variance Analysis of the Factory Overhead Variance (Continuation of Exercises 15-31 and 15-32) The Platter Valley factory of Bybee Industries uses a two-variance analysis of the total factory overhead variance.

Required

1. Use the data given in Exercises 15-31 and 15-32 to compute the total flexible-budget variance and the production-volume variance for March.

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2. Use your answers for Requirement 1 of Exercises 15-31 and 15-32 and determine the flexible-budget variance and the production-volume variance for March.

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3. What information is contained in each of the variances in a two-variance breakdown of the total overhead variance?

Step 1 of 6

Variable overhead variance is the difference between overhead budgeted and actual overhead at the end. Variable overhead variance includes following variances.

1. Variable flexible-budget variance

2. Variable overhead spending variance

3. Variable overhead efficiency variance