Sucher Company uses a standard cost system in which manufacturing overhead costs

Question

Sucher Company uses a standard cost system in which manufacturing overhead costs are applied to units of product on the basis of machine hours. The company's condensed flexible budget for manufacturing overhead is given below: Per Machine Hours Machine hour 20,000 25,000.00 30,000.00 Variable overhead costs 3.00 Fixed overhead costs 60,000.00 75000 90000 Total overhead costs 300,000.00 300,000.00 300,000.00 $360,000 $375,000 $390,000 The denominator level of activity is 30,000 machine hours.overhead costs for the year are given below: Standards call for 2.5 machine hours per unit of output. Actual activity and manufacturing overhead costs for the year are given below: Units produced 12,800 units Machine hours used 31,600 machine hours Overhead cost incurred: Variable costs 96,000.00 Fixed costs 297,000.00 Required: (a) What are the standard hours allowed for the input? (b) What was the variable overhead spending variance? (c) What was the variable overhead efficiency variance? (d) What was the fixed overhead budget variance? (e) What was the fixed overhead volume variance? Sucher Company uses a standard cost system in which manufacturing overhead costs are applied to units of product on the basis of machine hours. The company's condensed flexible budget for manufacturing overhead is given below: Per Machine Hours Machine hour 20,000 25,000.00 30,000.00 Variable overhead costs 3.00 Fixed overhead costs 60,000.00 75000 90000 Total overhead costs 300,000.00 300,000.00 300,000.00 $360,000 $375,000 $390,000 The denominator level of activity is 30,000 machine hours.overhead costs for the year are given below: Standards call for 2.5 machine hours per unit of output. Actual activity and manufacturing overhead costs for the year are given below: Units produced 12,800 units Machine hours used 31,600 machine hours Overhead cost incurred: Variable costs 96,000.00 Fixed costs 297,000.00 Required: (a) What are the standard hours allowed for the input? (b) What was the variable overhead spending variance? (c) What was the variable overhead efficiency variance? (d) What was the fixed overhead budget variance? (e) What was the fixed overhead volume variance?

Explanation / Answer

(a) Variable overhead spending variance = Actual Hours Worked * (Actual Overhead rate - Standard Overhead Rate) = Actual Variable Overhed - (Actual Hours Worked * Standard Overhead Rate) = 96000 - (31600 * 3) = 1200 Adverse (b) Variable overhead efficiency variance = Standard Overhead Rate (Actual Hours - Standard Hours) = 3 ( 31600-32000) = (1200) i.e 1200 Favourable Total Variable Overhead Variance = -1200 + 1200 = Nil (C) Fixed overhead budget variance = Actual Fixed Overhead - Budgeted Fixed Overhead) = 297000 - 300000 = (3000) i.e. 3000 Favourable (D) Fixed overhead volume variance = Budgeted Fixed Cost - Allocated Fixed Cost = 300000 - 31600 ( 300000/30000) = 300000 - 316000 = (16000) i.e. 16000 Favourable

Related Questions

Navigate

• Browse (All)
• Browse S
• Subjects

---

---

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