[Anonymous]

I was working two problems that involve the same fact pattern in Becker and don’t understand something they do.

It’s a problem where it asks you the variable OH spending variance and fixed OH spending variance.

Fact pattern gives you VOH = 4 hours at $8/hour and FOH = 4 hours at $5/hour

94,000 Direct Labor hours used

It gives you actual variable overhead and actual fixed overhead you just have to calculate the budget amount based on actual hours worked.

Well the solution for VOH says budgeted is 94,000 DLH (x) $8 an hour = 752,000

BUT!! the solution for FOH says budgeted is 100,000 DLH (x) $5 an hour = $500,000

My question is: WHY did they use 100,000 DLH for fixed and 94,000 for variable?? The standard amounts were based on 100,000 DLH. I thought you would use 94,000 DLH for both since it’s the actual amount.

Thanks

[ZRowe24]

I asked this same EXACT question on Saturday in the BEC study section. I am with you, it seems they should have used the 94,000 on both variances. However, I believe the exception is the asterisk next to the Fixed overhead rate which says the hourly rate is based on 100,000 hours.

I agree with you, but maybe we are wrong and the “Fixed” overhead is based on capacity. IDK.

If anyone else has input, it's question 47 on B2 section 2.

FAR- 83
AUD- 90
BEC- 85
REG- 87

[Author]

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