(One , two , and three variance approaches to OH variances) Terkelsen Mfg. produces comforter sets with the following standard cost information:
- Each comforter set requires 0.5 hours of machine time to produce.
- Variable overhead is applied at the rate of $9 per machine hour.
- Fixed overhead is applied at the rate of $6 per machine hour, based on an expected annual capacity of 30,000 machine hours.
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Production Statistics for 2010 |
|
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Number of comforter sets produced |
62,000 units |
|
Actual number of machine hours |
33,300 hours |
|
Variable overhead cost incurred |
$265,400 |
|
Fixed overhead cost incurred |
$177,250 |
a. Calculate variances using the one variance approach.
b. Calculate variances using the two variance approach.
c. Calculate variances using the three variance approach.