Marvelous Marshmellow corporation

The following data are the actual results for Marvelous Marshmallow Company for October.

 

Actual output ………………………………………………………………………………………………………………… 9,000 cases

 

Actual variable overhead …………………………………………………………………………………………………. $405,000

 

Actual fixed overhead ……………………………………………………………………………………………………… $122,000

 

Actual machine time ………………………………………………………………………………………………………. 40,500 machine hours

 

Standard cost and budget information for Marvelous Marshmallow Company follows:

 

Standard variable-overhead rate ………………………………………………………………………… $9.00 per machine hour

 

Standard quantity of machine hours ……………………………………………………………………. 4 hours per case of marshmallows

 

Budgeted fixed overhead ………………………………………………………………………………….. $120,000 per month

 

Budgeted output …………………………………………………………………………………………….. 10,000 cases per month

 

Required:

 

1. Use any of the methods explained in the chapter to compute the following variances. Indicate

 

whether each variance is favorable or unfavorable, where appropriate.

 

a. Variable-overhead spending variance.

 

b. Variable-overhead efficiency variance.

 

c. Fixed-overhead budget variance.

 

d. Fixed-overhead volume variance.

 

2. Build a spreadsheet: Construct an Excel spreadsheet to solve the preceding requirement. Show

 

how the solution will change if the following information changes: actual output was 9,100 cases,

 

and actual variable overhead was $395,000.