Graschl Company has had great difficulity in controlling manufacturing averhead
ID: 2575588 • Letter: G
Question
Graschl Company has had great difficulity in controlling manufacturing averhead casts. At a recent convention, the president heard abaut a cantral device for overhead casts known as a flexible budget, and he has hired you to implement this budgeting prograrn in Groechl Company. After sorme effort you have developed the fallawing cost formulas far the company's Machining Department. These costs are based o anormal operating range af 17,8O0 to 35,600 machine-hours per manth Cast Farmula Overhead Cost Utilities Lubricants Machine setup Indirect labour $1.07 per machine hour plus $123,000 per month Depreciatian S0.88 per machine hour $1.44 per machine-hour plus $11,750 per month S0.25 per machine-hour 37,500 per month During March, the first month after your preparation af the above data, the Machining Department worked 31,400 machine hours and produced 15,700 units of product. The actual manufacturing overhead casts for March were as folows Utilities Lubricants Machine setup Indirect labour S 26,122 55 216 9210 158 818 37,500 Depreciatin Toial manudscturing overheand coat208.366 Fixed costs had na budget variances. The department had originally been budgeted to wark 35,800 machine-haurs during March Required 1. Prepare an overhead perfarmance report far the Machining Department for the month of March indicate the effect of each variance by Belecting "F" for ravorable. "U" for unfavorable, and None" for no ettect .e., zero variance). Round "Cost Formula per MH" anewers to 2 declmal places.) Overhead Performance Report-Machining Department For the Month of March Cost Actual Formula per Flexible Budget Overhead Coats spending Variance MH MHs 31,400 MH8 Variable Total variable cost Fixed: Total fioxed coet Total averhead cost 0 SExplanation / Answer
The Groschi Company Overhead Performance Report - Machining Department For the Month of March Overhead Costs Cost Formula per MH Actual 31,400 MHs Flexible Budget 31,400 Mhs Spending Variance Variable: Utilities 0.88 26,122.00 27,632.00 1,510.00 (F) Lubricants 1.44 43,466.00 45,216.00 1,750.00 (F) Machine Setup 0.25 9,210.00 7,850.00 1,360.00 (U) Indirect Labor 1.07 35,818.00 33,598.00 2,220.00 (U) Total Variable Costs 3.64 114,616.00 114,296.00 320.00 (U) Fixed: Lubricants 11,750.00 11,750.00 - Indirect Labor 123,000.00 123,000.00 - Depreciation 37,500.00 37,500.00 - Total Fixed Costs 172,250.00 172,250.00 - Total Overhead Costs 286,866.00 286,546.00 320.00 (U)
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