Exercise 7-35 Name:
Insert your answers in the gray-shaded cells.
If an answer is incorrect, the word “wrong” will appear.
a.
Actual machine hours 442,880$ ÷ 20$ = 22,144 MH
MH budgeted 1,000,000$ ÷ 40$ = 25,000 MH
MH applied 966,000$ ÷ 40$ = 24,150 MH
Actual VOH VOH Rate x Act. Hrs.
$20 x 22,440 $20 x 24,500
$414,800
34,000$ Fav. 41,200$ Fav.
VOH Spending Variance VOH Efficiency Variance
Fav.
Total VOH Variance
Actual FOH
$40 x 25,000 40$ x 24,500
$1,028,000
28,000$ Unfav. 20,000$ Unfav.
FOH Spending Variance Volume Variance
Unfav.
Total FOH Variance
b. Standard machine hours per unit:
25,000 ÷ 20,000 = 1.25 hours
c. Actual machine hours worked:
$448,800 ÷ $20 = 22,440
Budgeted FOH
$1,000,000
$980,000
Solution
Applied VOH
$75,200
Applied FOH
$490,000
$448,800
$48,000
d. Total spending variance:
$28,000 – $34,000 = (6,000)$ Fav.
e.
f.
6,000
41,200
20,000
27,200
The VOH favorable efficiency variance resulted from using 2,060 fewer machine hours than
allowed given production of 20,000 units. The FOH volume variance resulted from
underutilizing capacity by 500 machine hours.
Cost of Goods Sold
Volume Variance
The VOH favorable efficiency variance resulted from using 2,060 fewer machine hours than
allowed given production of 20,000 units. The FOH volume variance resulted from
underutilizing capacity by 500 machine hours.