[amaffei]

A company uses a standard costing system. The production budget for year 1 was based on 200,000 units of output. Each unit requires two standard hours of manufacturing labor for completion. Total overhead was budgeted at 900K for the year, and the budgeted Fixed OH rate was $1.50 per direct manufacturing labor hour. Both variable and fixed overheads are allocated to the product based on direct manufacturing labor hours. The actual data for year 1 are as follows:

Actual Production in units = 198,000

Actual Direct Manufacturing Labor hours = 425,000

Actual Variable OH = 352,000

Actual Fixed OH = 575,000

What is the amount of unfavorable variable overheads efficiency variance? Answer is 21,750 – I cant figure out for the life of me – someone please help – thanks

[tptpa]

I think at this point the study group would be beneficial…

B- TBD (May 2015)
A- 87 (April 2015)
R- 87 (May 2015)
F- 79 (April 2015)

[nika_cpa]

Total O/H 900K/400,000 labor hrs (200,000 units x 2hrs each)=$2.25 Standard total O/H rate.

If Fixed O/H rate $1.5/hr, then $2.25-$1.5=$.75 Variable O/H standard rate.

Now solve for variances:

Standard DL hrs=198,000 units x 2hrs DL each=396,000

Actual DL hrs= 425,000 hrs

Difference: 425,000-396,000=29,000

29,000 x $0.75 Standard Variable O/H rate from above= $21,750 unfav. effic. variance

I hope this helps.

Becker self-study, Wiley Test Bank and books, Becker final review. NINJA MCQ bank and NINJA notes for BEC only!

AUD - PASSED!
FAR - PASSED!
REG - PASSED!
BEC - PASSED!

[amaffei]

thank u very much – it did help – your going to pass your BEC I believe it – thanks

[nika_cpa]

waiting for June 9th results…Thank you!

Becker self-study, Wiley Test Bank and books, Becker final review. NINJA MCQ bank and NINJA notes for BEC only!

AUD - PASSED!
FAR - PASSED!
REG - PASSED!
BEC - PASSED!

[golfball7773]

I like how these posts are in the “The Best of Another71” category

AUD - NINJA in Training
BEC - 86
FAR - NINJA in Training
REG - NINJA in Training

AUD - 71, 73

BEC - 74, 86

REG - 77*

FAR - 57

*expired

(I have been trying to become a CPA since 2013). only one test down.......

FAR: 63, 55, 62
REG: 65, 77*
AUD: Fail, 64, 71
BEC: 72, 74, 81

*expired

[Anonymous]

nikacpa explained really well

[Author]

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