Sharp Company manufacturers jeans In June Sharp made 1200 pa

Sharp Company manufacturers jeans. In June, Sharp made 1200 pairs of jeans, but had budgeted production at 1400 pairs of jeans. The allocation base for overhead costs is direct labor hours. The following additional data is available for the month:

Variable overhead cost standard $0.60 per DLHr

Direct labor efficiency standard 2.00 DLHr per jean

Actual amount of direct labor hours 2520 DLHr

Actual cost of variable overhead $1512

Fixed overhead cost standard $0.25 per DLHr

Budgeted fixed overhead $700

Actual cost of fixed overhead $750

Calculate total variable overhead variance and total fixed overhead variance, show work.

Solution

Actual production:1200 units Std labour hours for actual output: (1200*2): 2400 hours Std Variable Ohh rate per hour: $ 0.60 per DH Actual variable OH: $ 1512 Variable OH variance: Std labor hours*Std OH rate -Actual Variable OH 2400*0.60 - 1512 = 4 72 unfavorable Std fixed OH rate per hour: 0.25 per DLH Actual Fixed Oh incurred: $ 750 Fixed OH variance: Std labour hours*Std OH rate per hour - Actual fixed OH 2400 *0.25 -750 = $ 150 unfavorable