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Variance Analysis  Part (a): The table below provides partial information on the budgeted and actual overhead costs of the Hess Production Department during the last period

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Variance Analysis

 Part (a): The table below provides partial information on the budgeted and actual overhead costs of the Hess Production Department during the last period.

 Required:

 Fill in the amounts missing from the table. Please show your work.

 Standard machine hours per unit of output ......................................... 4 hours

Standard variable-overhead rate per machine hour ............................ $8.00

Budgeted fixed overhead .................................................................... $50,000     

Actual fixed overhead  ........................................................................ $65,000  

Budgeted production in units .............................................................. 25,000

Variable-overhead spending variance  ................................................ $72,000 U Variable-overhead efficiency variance ............................................... $192,000 F

Total actual overhead .......................................................................... $713,000 Total applied overhead ........................................................................ $816,000 Actual variable-overhead rate per machine hour ................................  ?   Actual number of machine hours ........................................................  ? 

Part (b) You are a student preparing for a job interview with a Fortune 100 consumer products manufacturer.  You are applying for a job in the Finance Department.  This company is known for its rigorous case-based interview process.  One of the students who successfully obtained a job with them upon graduation last year advised you to “know your variances cold!” When you inquired further, she told you that she had been asked to pretend that she was investigating wage and materials variances.  Per her advice, you have been studying the causes and consequences of variances.  You are excited when you walk in and find that the first case deals with variance analysis.  You are given the following data for May for detergent bottling plant located in Mexico: 

 

Actuals
Bottles filled	360,000
Direct Materials used in production	6,000,000 ozs
Actual direct material cost	2,125,000 pesos
Actual direct manufacturing labor-hours	22,040 hours
Actual direct labor cost	664,940 pesos
Standards
Purchase price of direct materials	0.35 pesos / oz
Bottle size	15 oz
Wage rate	29.30 pesos/hour
Bottles per minute	0.5

 

Determine wage price / spending variance & labor efficiency variances.