#23 Bovine Incorporated has a standard cost system in which it applies manufactu
ID: 2484605 • Letter: #
Question
#23
Bovine Incorporated has a standard cost system in which it applies manufacturing overhead to products on the basis of standard machine-hours (MHs). The company's cost formula for variable overhead is $7.37 per MH. The company had budgeted its fixed manufacturing overhead cost at $47,400 for the month. During the month, the actual total variable overhead was $57,700 and the actual total fixed manufacturing overhead was $44,900. The actual level of activity for the period was 9,000 MHs. What was the total of the variable overhead rate and fixed manufacturing overhead budget variances for the month?
a. $11,130 favorable
b. $8,630 unfavorable
c. $8,630 favorable
d. $11,130 unfavorable
Bovine Incorporated has a standard cost system in which it applies manufacturing overhead to products on the basis of standard machine-hours (MHs). The company's cost formula for variable overhead is $7.37 per MH. The company had budgeted its fixed manufacturing overhead cost at $47,400 for the month. During the month, the actual total variable overhead was $57,700 and the actual total fixed manufacturing overhead was $44,900. The actual level of activity for the period was 9,000 MHs. What was the total of the variable overhead rate and fixed manufacturing overhead budget variances for the month?
Explanation / Answer
Ans. Bovine Incorporated has a standard cost system in which it applies manufacturing overhead to products on the basis of standard machine-hours (MHs).
1) Fixed manufacturing overhead budget variances= Budgeted Fixed manufacturing overhead - Actual Fixed manufacturing overhead
=$47400-$44900
=$2,500(F)
2) Variable overhead rate variances = Budgeted Variable overhead - Actual Variable overhead
= (Actual MH*Standard MH rate)- Actual Variable overhead
=(9000 hrs*$7.37/hr)-$57,700
=$66.330-$57,700
=$8630(F)
Total of the variable overhead rate and fixed manufacturing overhead budget variances for the month is $8630(F)+$2,500(F) =$11,130Favourable
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.