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

Exercise 51

Factory Overhead Variances Shateau Job Shop had the following operating data for its operations in 2010:

Budgeted fixed overhead	$20,000
Standard variable overhead application rate	$3 per MH
Fixed overhead incurred	$21,400
Variable overhead incurred	$32,500
Practical capacity (5,000 units)	10,000 MH
Actual machine hours (MH) worked	9,500
Units produced	4,500

Required Build an Excel spreadsheet for the Shateau Job Shop that computes the following:

1. Variable overhead spending variance.

---

2. Variable overhead efficiency variance.

---

3. Fixed overhead spending (budget) variance.

---

4. Production-volume variance.

---

5. Overhead spending variance using a three-variance analysis.

---

6. Overhead flexible-budget (controllable) variance using a two-variance analysis.

Step 1 of 18

Variance vs Budgets:

In costing, variance is a difference occurred between planned, standard or budgeted cost and the actual cost incurred. These variances can be for both cost and revenue. These variances can be favourable or unfavourable.