view previous attemp 7 Problem 10A-9 Applying Overhead; Overhead Variances [LO10
ID: 2528071 • Letter: V
Question
view previous attemp 7 Problem 10A-9 Applying Overhead; Overhead Variances [LO10-3, LO10-4] Chilczuk, S.A., of Gdansk, Poland, is a major producer of classic Polish sausage. The company uses a standard cost system to help control costs. Manufacturing overhead is applied to production on the basis of standard direct labor-hours. According to the company's planning budget, the following manufacturing overhead costs should be incurred at an activity level of 23,000 labor-hours the denominator activity level): points Print References Variable manufacturing overhead cost Fixed manufacturing overhead cost Total manufacturing overhead cost 92,000 138,000 230,000 During the most recent year, the following operating results were recorded: Activity: Actual labor-hours worked Standard labor-hours allowed for the actual output 20,000 21,000 Cost: Actual variable manufacturing overhead cost incurred Actual fixed manufacturing overhead cost incurred 106,000 120,750Explanation / Answer
Requirement 1 Direct labor hours 23000 Hours Variable manufacturing overhead 92000 Predetermined variable overhead rate 4 Fixed manufactured overhead 138000 Predetermined fixed overhead rate 6 Total manufacturing overhead 230000 predetermined overhead rate 10 Requirement 2 Standard labor hours allowed for actual output 21000 predetermined overhead rate 10 Applied manufacturing overhead 210000 Requirement 3 Factory Overhead Variable overhead Efficiency Variance Standard Hours 21000 Actuals Hours 20000 Variance 1000 Standard rate 4 Variable Overhead efficiency Variance 4000 Favourable Budget/Expenditure Variance Standard Rate 4 Actual rate 5.3 Variance 1.3 Actual Hours 20000 Variable Overhead expenditure Variance -26000 Unfavourable Fixed Overhead Volume Variance Actual hours 21000 Standard rate 6 Total 126000 Less : Budgted Fixed overhead 138000 Variable Overhead efficiency Variance -12000 Unfavourable Budget/Expenditure Variance Budgted Fixed overhead 138000 Actual Fixed overhead 120750 Variable Overhead expenditure Variance 17250 Favourable Total overhead variance -16750 Unfavourable
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