Bigton Company Uses a Standard Costing System Information for the Month of November Is as Follows

Essay

Bigton Company uses a standard costing system.The following monthly cost functions apply to its manufacturing overhead items: $$\begin{array} { l r } \text { Overhead Item } & \text { Cost Function } \\\text { Indirect materials } & \$ 0.80 \text { per DLH } \\\text { Indirect labour } & \$ 1.00 \text { per DLH } \\\text { Utilities } & \$ 0.40 \text { per DLH } \\\text { Insurance } & \$ 8,000 \\\text { Depreciation } & \$ 32,000\end{array}$$ Information for the month of November is as follows: $\begin{array}{lr}\text { Actual overhead costs incurred: } & \\\text { Indirect materials } & \$ 20,800 \\\text { Indirect labour } & 24,000 \\\text { Utilities } & 9,600 \\\text { Insurance } & 8,800 \\\text { Depreciation } & 32,000 \\\quad \text { Total } & \$ 95,200 \\\\\text { Actual direct labour hours worked }&24,000\\\text { Standard direct labour hours allowed for production achieved }&27,000\end{array}$ Bigton uses expected capacity to calculate standard overhead rates.The monthly expected capacity is 25,000 hours. A. Calculate the following standard overhead rates based upon expected capacity:
Variable overhead rate
Fixed overhead rate
Total overhead rate

B. Calculate the following variances:
Variable overhead spending variance
Variable overhead efficiency variance
Fixed overhead spending variance
Fixed overhead volume variance