Crowe Corporation has developed a standard cost system to account for ts manufac

Question

Crowe Corporation has developed a standard cost system to account for ts manufacturing operations. It has determined that for onc of the products that it manufactures the attached standard Crowe estimated at the beginning of the year that they would incur S100,000 of variable manufacturing overhead costs in the Cutting Department while working 40,000 direct labor hours. They also estimated that they would incur S120,000 of variable manufacturing overhead costs in the Assembly Department while working 24,000 direct labor hours and using 20,000 machine hours. Fixed number of direet labor hours worked in the Assembly Department. overhead was budgeted at S120,000 which is to be applied based upon the The actual results for producing 85,000 units during the current year are also attached. REQUIRED: Calculate the following items based upon the attached information. ound all rates to the nearest cent (two decimal places) and all variances to the nearest whole dollar (a) Predetermined Variable Manufacturing Overhead Rate for the Cutting (b) Predetermined Variable Manufacturing Overhead Rate for the Assembly (c) Predetermined Fixed Manufacturing Overhead Rate. (d Direct Materials Price Variance. (e) Direct Materials Quantity Variance. (f Direct Labor Price (Rate)and Quantit (Efficiency) Variance for the Cutting (g) (h) (i) Direct Labor Price (Rate) and Quantity (Efficiency) Variance for the Variable Manufacturing Overhead Price (Spending) and Quantity(Efficiency) Variance for the Cutting Department. Variable Manufacturing?verhead Price (SpendingandQuantity(Efficiency) ) Fixed Manufacturing Overhead Price (Spending) Variance. (k) Fixed Manufacturing Overhead Volume (Quantity) Variance.

Explanation / Answer

Solution J:

Budgeted fixed manufacturing overhead = $120,000

Actual fixed manufacturing overhead = $118,500

Fixed manufacturing overhead price (spending) variance = Budgeted fixed manufacturing overhead - Actual fixed manufacturing overhead

= $120,000 - $118,500 = $1,500 F

Solution K:

Budgeted fixed manufacturing overhead = $120,000

Predetermined fixed manufacturing overhead rate = Bedgeted fixed manufacturing overhead / Budgeted direct labor hour in assembly = $120,000 / 24000 = $5 per direct labor hour

Fixed manufacturing overhead applied = Standard direct labor hours of assembly * standard rate

= (85000 * 0.30) * $5 = $127,500

Fixed manufacturing overhead volume (quantity) variance = Fixed manufacturing overhead applied - Budgeted fixed manufacturing overhead

= $127,500 - $120,000 = $7,500 F

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