Shimon Corporation manufactures industrial-sized water coolersand uses budgeted

Question

Shimon Corporation manufactures industrial-sized water coolersand uses budgeted machine-hours to allocate variable manufacturingoverhead. The following information pertains to the company'smanufacturing overhead data:

Budgeted outputunits           15,000 units

Budgeted machine-hours       5,000 hours

Budgeted variable manufacturing overhead costs for 15,000units   $161,250

Actual output units produced 22,000 units

Actual machine-hours used     7,200hours

Actual variable manufacturing overheadcosts          $242,000

What is the budgeted variable overhead cost rate per outputunit?  

What is the flexible-budget amount for variable manufacturingoverhead?  

What is the flexible-budget variance for variablemanufacturing overhead?  

Explanation / Answer

What is the budgeted variable overhead cost rate per outputunit?   $161,250 / 15,000units   =   $10.75 What is the flexible-budget amount for variable manufacturingoverhead? Actual output unitsproduced    x    budgetedvariable overhead cost rate per output unit 22,000 units x$10.75   =   $236,500 What is the flexible-budget variance for variablemanufacturing overhead? Actual variable manufacturing overheadcosts -   flexible-budget amount for variablemanufacturing overhead $242,000   -   $236,500   =   $5,500Unfavorable

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