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Zeta Inc produces handwoven rugs Budgeted production is 5 000 rugs per month and the standard direct labor required to make each rug is 2 hours All overhead is allocated based on direct labor

Zeta, Inc., produces handwoven rugs. Budgeted production is 5,000 rugs per month and the standard direct labor required to make each rug is 2 hours. All overhead is allocated based on direct labor hours. Zeta's manager is interested in what caused the recent month's $3,000 unfavorable overhead variance. The following information was available to aid in the analysis:

  Budgeted amounts   Actual Results
   Production in units     5,000         4,500  
  Total labor hours     10,000         9,000  
  Total variable overhead   $ 60,000       $ 55,000  
  Total fixed overhead     40,000         38,000  
                   
       Total overhead   $ 100,000       $ 93,000  
                   
 
a.

What was the overhead spending variance for the month?

b.

What was the overhead volume variance?

Jun 23 2020 View more View Less

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