Henton, Inc

Essay

Henton, Inc. budgeted $270,000 for overhead. Based on a normal activity level of 6,000 units and a standard of 3 machine hours per unit, the standard fixed overhead allocation rate is $12 per machine hour. During the current period, 6,200 units were produced and 5,600 units were sold. Actual machine hours were 18,000, and actual overhead was $272,000.
a)Calculate the combined variable and fixed overhead spending variance.
b)Calculate the variable overhead efficiency variance.
c)Calculate the fixed overhead production volume variance.
d)By how much was total overhead overapplied or underapplied?
e)Explain why actual overhead costs are usually different than budgeted overhead costs.
f)Explain why managers do not need to investigate a variable overhead efficiency variance, regardless of its materiality.