The following data are the actual results for Marvelous Marshmallow Company for October. Actual output ……………………………………………………………………………………

The following data are the actual results for Marvelous Marshmallow Company for October.

Actual output ………………………………………………………………………………………………………………… 9,000 cases

Actual variable overhead …………………………………………………………………………………………………. $405,000

Actual fixed overhead ……………………………………………………………………………………………………… $122,000

Actual machine time ………………………………………………………………………………………………………. 40,500 machine hours

Standard cost and budget information for Marvelous Marshmallow Company follows:

Standard variable-overhead rate ………………………………………………………………………… $9.00 per machine hour

Standard quantity of machine hours ……………………………………………………………………. 4 hours per case of marshmallows

Budgeted fixed overhead ………………………………………………………………………………….. $120,000 per month

Budgeted output …………………………………………………………………………………………….. 10,000 cases per month

Required:

1. Use any of the methods explained in the chapter to compute the following variances. Indicate

whether each variance is favorable or unfavorable, where appropriate.

a. Variable-overhead spending variance.

b. Variable-overhead efficiency variance.

c. Fixed-overhead budget variance.

d. Fixed-overhead volume variance.

2. Build a spreadsheet: Construct an Excel spreadsheet to solve the preceding requirement. Show

how the solution will change if the following information changes: actual output was 9,100 cases,

and actual variable overhead was $395,000.

Leave a Comment