Variable Overhead Variances Service Company Rostand Inc oper

Variable Overhead Variances, Service Company Rostand Inc. operates a delivery service for over 70 restaurants. The corporation has a fleet of vehicles and has invested in a sophisticated, computerized communications system to coordinate its deliveries. Rostand has gathered the following actual data on last year\'s delivery operations Deliveries made Direct labor Actual variable overhead $157,700 Rostand employs a standard costing system. During the year a variable overhead rate of $.1 hour was used. The labor standard requires 0.80 hour per delivery. Required 1. Compute the standard hours allowed for actual deliveries made last year 38,600 31,000 direct labor hours$14.00 direct labor hours 2. Compute the variable overhead spending and efficiency variances. Enter amounts as posive numbers and select Favorable or Unfavorable. Spending variance Efficiency variance Favorable Unfavorable V Foedback Check My Work 1. Standard direct labor hours allowed (applied) Actual deliveries x Standard direct labor hours 2. Spending variance: Actual VOH -Applied VOH; or Actual VOH (SVOR x AH) Or: (AVOR SVOR) x AH Efficiency variance: Applied VOH Budgeted VOH Or: (AH SH) x SVOR Check you Total VOH Variance Actual VOH Applied VOH r work: The total variable overhead variance is the sum of the two variances or: Review the \'How to Calculate Variable Overhead Spending and Efficiency Variances: Columnar and Formula Approaches\' example in your text.

Solution

Part 1

Standard hours allowed = actual deliveries * standard labor per delivery = 38600*0.80 = 30880

Part 2

Spending variance = Actual VOH - Applied VOH = actual VOH - (SVOR * AH) =157700-(5.10*31000) = 157700 - 158100 = - 400 =400 Favorable

Efficiency variance = SVOR * (AH-SH) =5.10*(31000-30880) = 612 = 612 Unfavorable