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hro ? Secure I https://www.maths.com/Student/PlayerHomework.aspx?homeworkid=485279966&questionid;=1&flushed-false;&cld;:5034031&centerwinsyes; ACC 203- Summer 2018 (1) Corey Gray6/21/18 5:53 PM Homework: Chapter 11 Homework - Required Score: 0 of 3 pts E11-30A (similar to) Save 3 of 3 (1 complete) HW Score: 24.24%, 2.18 of 9 pts Question Help Earthern Ware is a manufacturer of large flower pots for urban settings. The company has these standards Click the icon to view the standards.) Click the icon to view the actual results.) Requirements 1. Compute the variable manufacturing overhead variances. What do each of these variances tell management? 2. Compute the fixed manufacturing overhead variances. What do each of these variances tell management? varian 2. Compute the ixed Requirement 1. Compute the variable manufacturing overhead variances. What do each of these variances tell management? (Enter the variances as positive numbers. Enter the currency amounts in the formulas to the nearest cent, then round the final variance amounts to the nearest whole dollar. Label the variance as favorable (F) or unfavorable (U).) Begin by computing the variable manufacturing overhead rate variance. First determine the formula for the rate variance, then compute the rate variance for variable manufacturing overhead Variable overhead rate variance Choose from any list or enter any number in the input fields and then click Check Answer Clear All Check Answer remaining atl 5:53 PM 6/21/2018

Solution

Solution 1:

Standard hours of direct labor = 1000 * 2 = 2000 hours

Standard rate of variable overhead = $6 per hour

Actual hours of direct labor = 2500 hours

Actual rate of variable overhead = $6.20 per hour

Variable overhead rate variance = (SR - AR) * AH = ($6 - $6.20) * 2500 = $500 U

Variable overhead efficiency variance = (SH - AH) * SR = (2000 - 2500) * $6 = $3,000 U

Total variable overhead variance = $500 U + $3,000 U = $3,500 U

These variances tell management that our actual variable overhead is higher than standard variable overhead cost resulting in unfavorable variances. Management should investigate reasons behind unfavorable variances due to reduce variable overhead cost to standard cost.

Solution 2:

Budgeted fixed manufacturing overhead = $21,000

Actual fixed manufacturing overhead = $20,300

Fixed manufacturing overhead applied = 2000 * $11 = $22,000

Fixed overhead budget variance = Budgeted fixed overhead - Actual fixed overhead = $21,000 - $20,300 = $700 F

Fixed overhead volume variance = Fixed overhead applied - Budgeted fixed overhead = $22,000 - $21,000 = $1,000 F

Total fixed overhead variance = $700 F + $1,000 F = $1,700 F

These variances tell management that fixed overhead are under control as incurred cost is lower than budgeted cost. Therefore management wishes to keep the same trend for reduction in future.