Rand Company: Units actually produced 76,000 Actual Direct Labor Hours worked 16
ID: 2484443 • Letter: R
Question
Rand Company: Units actually produced 76,000 Actual Direct Labor Hours worked 160,000 Actual variable overhead incurred $500,000 Actual fixed overhead incurred 384,000 Based on monthly normal volume of 100,000 units (200,000 direct labor hours), Rands standars cost system contained the following overhead costs: Varuable $6 per unit Fixed 4 per unit
The fixed overhead budget was?
A. 8,000 U
B. 8,000 F
C. 16,000 U
D. 16,0000 F
The unfavorable varianble overhead spending variance was
A. 12,000
B.20,000
C. 24,000
D 44,000
The fixed overhead volume variance was
A. 96,000 U
B. 96,000 F
C. 80,000 U
D. 80,000 F
Explanation / Answer
1
The fixed overhead budget was= 16000 u
Working notes for the above answer is as under
2
The unfavorable varianble overhead spending variance was
Answer:20,000
Working notes for the above answer is as under
Variable Overhead Spending Variance
Actual hours worked x (Actual overhead rate - standard overhead rate)
= Variable overhead spending variance
=160,000 * (3.125 -3)
=160000*0.875
=20,000
* Standered Variable overhead rate is $ 6 per units
=per units required 2 direct labour hour so per hour hour direct labour hour is =6/2
=$ 3 per hour
3
The fixed overhead volume variance was
Answer: $ 96000 F
Working notes for the above answer is under
Fixed Overhead Volume Variance = Applied Fixed Overhead – Budgeted Fixed Overhead
Budgeted fixed OH
=2*200,000
=400,000
Fixed Overhead Volume Variance = Applied Fixed Overhead – Budgeted Fixed Overhead
=76000*4-400,000
=304000-400,00
=96000 F
Fixed Over head rate 4 per units Monthly normal vaolume 100,000 units Direct labour hours monthly 200,000 Total fixed cost standered=200,000*4 400000 Actual fixed overhead incurred 384000 fixed overhead budget was
=400,000-384000 16000 16000 u
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