The predetermined overhead rate is based on a planned operating volume of 80% of

Question

The predetermined overhead rate is based on a planned operating volume of 80% of the productive capacity of 53,000 units per quarter. The following flexible budget information is available.

During the current quarter, the company operated at 70% of capacity and produced 37,100 units of product; actual direct labor totaled 258,600 hours. Units produced were assigned the following standard costs:

Compute the variable overhead spending and efficiency variances. (Round "cost per unit" and "rate per hour" answers to 2 decimal places.)

Compute the fixed overhead spending and volume variances. (Round "cost per unit" and "rate per hour" answers to 2 decimal places.)

Compute the total overhead controllable variance.

Explanation / Answer

Answer:- 1)

Variable Overhead Spending Variance:

= Actual Manufacturing Variable Overheads Expenditure - Actual hours x Standard Variable Overhead Rate per hour

= 1,150,770 - 258,600*4.6= 38,790 (F)

Variable Overhead Efficiency rate

=Standard overhead rate x (Actual hours - standard hours)

= 4.6( 258600- 259,700) = 5060 (A)

2)  Fixed overhead spending variance

= Actual fixed overhead - Budgeted fixed overhead

= 2,321,400 - 2068800 = 252600 (F)

Fixed Overhead Application Rate= 3,272,220 / 853,300 = 3.83

Applied Fixed Overhead= 797,300 * 3.83 = 30,53,659

Fixed Overhead Volume Variance= 30,53,659- 3,272,220 =218561(A)

3) total overhead controllable variance

=Actual overhead expense - (budgeted overhead per unit x standard number of units)

= 34,72,170 - ( 88.20 * 37100 )= 1,99,950 (F).

Related Questions

Navigate

• Browse (All)
• Browse T
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.