Assignment of Chapter (8): 5 Marks

Question: Sami Company uses standard costing in its manufacturing plant for
products. Because of the need to comply with the managers' requests, eight
different variances for manufacturing overhead are computed each month
based on direct labor hours. The information for the August overhead
expenditures is as follows:

Budgeted output units 3,200units

Budgeted fixed manufacturing overhead $20,000
Budgeted variable manufacturing overhead $5 per direct labor hour
Budgeted direct manufacturing labor hours 2 hours per unit
Fixed manufacturing costs incurred $26,000
Direct manufacturing labor hours used 7,200
Variable manufacturing costs incurred $35,600
Actual units manufactured 3,400

Required:
1- Prepare an analysis of all variable manufacturing overhead and fixed
manufacturing overhead variances, using the 4-variance analysis in the
following table: (Show all calculations needed to answer questions 1 – 8)

Total Production Efficiency Spending 4-Variance

Variance Volume Variance Variance Variance Analysis
Variable
Manufacturing
Overhead

Fixed
Manufacturing
Overhead