overhead variance :manaufacture
Bright Spark Ltd is a manufacture of the electrical switches, and uses a standard costing system. the standard manufacturing overhead costs per seitch are based on labour hours and are as following:
variable overhead (5hours @ $12 per hour) $60
fixed overhead (5 hours @ $18 per hour) 90
total overhead $150
based on capacity of 300000 direct labour hours per month
the following information is available for month of October:
56000 switches were produced, although 60000 switches were budgeted.
275000 direct labour hours were worked at a total cost of $3825000.
variable overhead costs were $3510000.
fixed overhead costs were $5625000
required:
calculate the variable overhead spending and efficiency variance and the fixed overhead budget and volume variance for October. Indicate whether each variance if favourable or unfavourable.