CMA Study Group

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  • 1.  Question

    Posted 02-05-2020 08:07 AM
    A company compiled the following information:
    Actual factory overhead
    $22,500
    Fixed overhead expenses, actual
    $10,800
    Fixed overhead expenses, budgeted
    $10,500
    Actual hours
    5,250
    Standard hours
    5,700
    Variable overhead rate per DLH
    $3.80
    What is the spending variance assuming the company uses a three-way analysis of overhead?


  • 2.  RE: Question

    Posted 02-06-2020 05:20 AM
    the answer is C.8250 favorable
    actual factory overhead= actual variable overhead + actual fixed overhead
    22500=actual variable overhead+10800
    22500-10800=11700
    actual variable overhead = 11700
    actual variable overhead rate per DLH=actual variable overhead/actual hours
    11700/5250=2.22857 DLH
    spending variance=(actual variable overhead-standard variable overhead)*actual hours
    (2.22857-3.8)*5250=8250 favorable because the actual cost less than standard

    ------------------------------
    Hebah Masoud
    Supervisor
    Amman
    Jordan
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    Original Message


  • 3.  RE: Question

    Posted 02-06-2020 07:48 AM
    Answer A 
    3 way analysis spending variance = Variable + Fixed OH variance 
    8250 as shown above  - 300 OH variance since fixed OH cost driver wasnt given assume that the difference between the actual and fixed is the spending variance for fixed OH 
    8250 F - 300 U = 7950 F

    ------------------------------
    Mohammed Al Dibes
    Other
    Edmonton AB
    Canada
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    Original Message