(SOLVED) Bright Spark Ltd is a manufacturer of electrical switchers and


Question Description:

$20

Bright Spark Ltd is a manufacturer of electrical switchers, and uses a standard costing system standard manufacturing overhead costs per switch are based on direct labour hours and are allows:
Variable overhead (5 hours @ $24 per hour) …………………………………. $ 120
Fixed overhead (5 hours @ $36 per hour)* …………………………………….. 180
Total overhead …………………………………………………………………. $300
* Based on capacity of 300 000 direct labour hours per month.
The following information is available for the month of October:
• 56 000 switches were produced, although 60 000 switches were budgeted.
• 275 000 direct labour hours were worked at a total cost of $7 650 000.
• Variable overhead costs were $7 020 000.
• Fixed overhead costs were $11 250 000.
Required:
Calculate the variable overhead spending and efficiency variances and the fixed overhead budget and volume variance for October. Indicate whether each variance is favourable or unfavourable?

Answer

$20