Requirements 1. Compute the variable manufacturing overhead variances. What do e
ID: 2580909 • Letter: R
Question
Requirements
1. Compute the variable manufacturing overhead variances. What do each of these variances tell management?
2. Compute the fixed manufacturing overhead variances. What do each of these variances tell management?
Standard Price and Volume
Direct materials (resin). . . . . . . . . . . . . . . . . . . . . . .
13 pounds per pot at a cost of $4.00
per pound
Direct labor. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4.0 hours at a cost of $17.00 per hour
Standard variable manufacturing
overhead rate. . . . . . . . . . . . . . . . . . . . . . . . .
$7.00 per direct labor hour
Budgeted fixed manufacturing overhead. . . . . . . . .
$50,000
Standard fixed MOH rate. . . . . . . . . . . . . . . . . . .
$10.00 per direct labor hour (DLH)
Actual Results
Country Designs allocated fixed manufacturing overhead to production based standard direct labor hours. Last month, the company reported the following actual results for the production of 1,300 flower pots:
Direct materials. . . . . . . . . . . . . . . . . . . . . . . .
Purchased 18,510 pounds at a cost of
$4.50 per pound; Used 17,810 pounds to
produce 1,300 pots
Direct labor. . . . . . . . . . . . . . . . . . . . . . . . . . . .
Worked 4.5 hours per flower pot (5,850
total DLH) at a cost of $16.00 per hour
Actual variable manufacturing overhead. . . . .
$7.20 per direct labor hour for total
actual variable manufacturing overhead
of $42,120
Actual fixed manufacturing overhead. . . . . . .
$49,500
Standard fixed manufacturing overhead
allocated based on actual production. . . . . . .
$52,000
Direct materials (resin). . . . . . . . . . . . . . . . . . . . . . .
13 pounds per pot at a cost of $4.00
per pound
Direct labor. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4.0 hours at a cost of $17.00 per hour
Standard variable manufacturing
overhead rate. . . . . . . . . . . . . . . . . . . . . . . . .
$7.00 per direct labor hour
Budgeted fixed manufacturing overhead. . . . . . . . .
$50,000
Standard fixed MOH rate. . . . . . . . . . . . . . . . . . .
$10.00 per direct labor hour (DLH)
Homewors - Ben McClintosh - Google Chrome A Secure https://www.mathxl.com/Student/PlayerHomework.aspx?homeworkld- 4374013518.questionid=1&flushed; = false&cid;=4571334¢erwin; -- yes ACIS 2116 - Fall 2017 (80127) Ben McIntosh & | 11/27/17 11:15 AM Save Homework: Chapter 11 - Homework Assignment Score: 0 of 2 pts ( 5 of 8 (2 complete) v > E11-30A (book/static) Hw Score: 21.43%, 3 of 14 pts 13 Question Helpo Country Dusigris is a manufacturer of large lower pols for urban settings. The cornpany has these sturndards: (click the icon to view the standards.) E (Click the icon to view the actual results.) Requirements 1. Compute the variable manufacturing overhead variances. What do each of these variances tell management? 2. Compute the ixud ranufacturing overhead variarioss. Wirat do each of these variarious toll rrarnagement? O Actual Results fell management? (Enter the variances as positive numbers, Enter the currency amounts in the formulas to the nearest cent, then round the final te variance, then compute the rate variance for variable manufacturing overhead. Variable overhead rate variance Standard Price and Volume - X Country Designs allocated fixed manufacturing owerhead to production based on standard direct labor hours. Last month, the concerny Ioported the following actual results for the production of 1,300 ficwer pats: Direct materials, . . Purchased 18,510 pounds at a cost of $4.50 per pound; Used 17,810 pounds to produce 1,300 pots Direct labor. . . Worced 4.5 hours per flower pot (5,850 total DLH at a cost of $16.00 per hour Actual variabile manufacturing overhead.. ... $7.20 per direct labor hour for total actual variable manufacturing overhead of $42,120 Actual fixed manufacturing overhead ....... $49,500 Standard fixed manufacturing overhead allocated based on actual production ... S52,000 Direct materials (resin). . 13 pounds per pot at a cost of $1.00 per pounci Direct labor .. ..4.0 hours at a cost of $17.00 per hour Standarci variatic manufacturing owerhead rate ...S7.00 per direct labor hour Budgeted lixed manufacturing overhead ....... ..$50,000 Standard fixed MOH rate .S10.00 per direct labor hour (DLH) Print Done Check Answer Print Done ! O e B É . 9 E O Type here to search OCTOBER 28 NOVEGA = qui pe 2 1107/2012Explanation / Answer
Answer 1:
Variable manufacturing overhead variance =
Answer 1:
Variable manufacturing overhead variance =
= (Actual Price - Standard Price)*Actual hours = (7.20-7)*5850 = 1170 Unfav The unfavorable variable manufacturing overhead rate indicates that the actual variable overhead cost that was incurred was more than the budgeted cost. Variable overhead efficiency variance = Standard variable rate * (Actual machine hours - standard hours) = 7*(5850 - (1300*4)) = 4550 Unfav The unfavorable variable efficiency variance is unfavorable because the direct labor hours actually used was more than the budgeted. Answer 2: Fixed overhead budget variance = (Actual fixed overhead - Budgeted fixed overhead) = (49500-50000) = -500 Fav This variance is favorable which indicates that the actual fixed cost incurred was less than budgeted Fixed overhead volume variance = Budgeted fixed overhead for actual outputs - standard fixed overhead allocated to production = (10*5850)-52000 = 6500 Fav The favorable variance of 6500 states that the fixed overhead applied was less than budgetedRelated Questions
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