Anticipated production is 7,500 direct labor hours.
Fixed OH budgeted to be $60,000.
Actual Output
6,000 Standard Labor Hours (3,000 units)
Actual Variance OH Expense $30,600
Actual Fixed OH Expense $62,000
Bought and used 12,000 lbs. @ $17 lb. $204,000
Paid for 6,500 hrs. of Direct Labor $13,000
D.M. Price Variance (17-15) 12,000 = 24,000 UNF
D.M. Usage Variance (12,000-12,000)(15) = 0
D.L. Price Variance (21-20)(6,500) = 6,500 UNF
D.L. Efficiency Variance (6,500-3,000(2))(20) =10,000 UNF
Fixed OH Flexible Budget Variance
Actual Cost - Budget based on standard inputs allowing for actual outputs achieved
62,000 - 60,000 = 2,000 UNF
(Fixed irrespective of volume)
Fixed OH Production Volume Variance
Budgeted Cost - Fixed OH Applied
6,000 6,000(8) = 12,000 U
Variable OH Flexible Budget Variance
Actual V OH Cost - Budget Based on Standard Inputs Allowed for Outputs Achieved
30,600 6,000(5) = 600 U
Variable OH Applied
Budget Applied
6,000(5) 6,000(5) = 0
Analysis - OH
Spent $92,600 -
Should have if within budget 6,000(8+5) = $78,000 14,600 U
Because worked at 6,000 instead of 7,500, did not absorb the Fixed OH fully.
Fixed
60,000 (Budget) - 6,000(8) = 12,000 not absorbed
62,000 Actual - 60,000 (Budget) 2,000 spent more than budget 14,000
Variable
30,600 Actual - 20,000 (should have spent per budget) = 600
30,000 should have spent if - 6,000(5) - V.OH = -0-
standard was met applied
TOTAL = 14,600