Crystal Glassware Company has the following standards and flexible-budget data. Standard variable-overhead rate $ 8.00 per direct-labor hour Standard quantity of direct labor 3 hours per unit of output Budgeted fixed overhead $ 138,000 Budgeted output 23,000 units Actual results for April are as follows: Actual output 16,000 units Actual variable overhead $ 480,000 Actual fixed overhead $ 133,000 Actual direct labor 55,000 hours Required: Compute the following variances and indicate the effect of each variance. (Indicate the effect of each variance by selecting "Favorable", "Unfavorable", and "None" for no effect (i.e., zero variance). Do not round your intermediate calculations. Input all amounts as positive values. Omit the "$" sign in your response.) Variable-overhead spending variance $ Unfavorable Variable-overhead efficiency variance $ Unfavorable Fixed-overhead budget variance $ Favorable Fixed-overhead volume variance $ Unfavorable Explanation: Variable-overhead spending variance = actual variable overhead – (AH × SVR) = $480,000 – (55,000 × $8.00) = $40,000 U Variable-overhead efficiency variance = SVR(AH – SH) = $8.00(55,000 – 48,000*) = $56,000 U *SH = 48,000 hrs. = 16,000 units × 3 hrs. per unit Fixed-overhead budget variance = actual fixed overhead – budgeted fixed overhead = $133,000 – $138,000 = $5,000 F Fixed-overhead volume variance = budgeted fixed overhead – applied fixed overhead = $138,000 – $96,000† = $42,000 (positive sign**) †Applied fixed overhead = (predetermined fixed overhead rate) × (standard allowed hours) = formula39.mml × (16,000 × 3) = $96,000 ** Some accountants would designate a positive volume variance as "unfavorable" and a negative volume variance as "favorable", but some accountants may choose not to interpret the volume variance as either favorable or unfavorable.

Crystal Glassware Company has the following standards and flexible-budget data.      

Standard variable-overhead rate	$	8.00	per direct-labor hour
Standard quantity of direct labor		3	hours per unit of output
Budgeted fixed overhead	$	138,000
Budgeted output		23,000	units

  

Actual results for April are as follows:

  

Actual output		16,000	units
Actual variable overhead	$	480,000
Actual fixed overhead	$	133,000
Actual direct labor		55,000	hours

  

Required:

Compute the following variances and indicate the effect of each variance. (Indicate the effect of each variance by selecting "Favorable", "Unfavorable", and "None" for no effect (i.e., zero variance). Do not round your intermediate calculations. Input all amounts as positive values. Omit the "$" sign in your response.)

  

Variable-overhead spending variance	$	Unfavorable
Variable-overhead efficiency variance	$	Unfavorable
Fixed-overhead budget variance	$	Favorable
Fixed-overhead volume variance	$	Unfavorable

Explanation:

Variable-overhead spending variance	=	actual variable overhead – (AH × SVR)
	=	$480,000 – (55,000 × $8.00)
	=	$40,000 U

 

Variable-overhead efficiency variance	=	SVR(AH – SH)
	=	$8.00(55,000 – 48,000*)
	=	$56,000 U

  

*SH = 48,000 hrs. = 16,000 units × 3 hrs. per unit

 

Fixed-overhead budget variance	=	actual fixed overhead – budgeted fixed overhead
	=	$133,000 – $138,000
	=	$5,000 F

  

Fixed-overhead volume variance	=	budgeted fixed overhead – applied fixed overhead
	=	$138,000 – $96,000†
	=	$42,000 (positive sign**)

 

†Applied fixed overhead	=	(predetermined fixed overhead rate) × (standard allowed hours)
	=		× (16,000 × 3)
	=	$96,000

  

**	Some accountants would designate a positive volume variance as "unfavorable" and a negative volume variance as "favorable", but some accountants may choose not to interpret the volume variance as either favorable or unfavorable.