Exercise 23-21 The information shown below was taken from the annual manufacturi
ID: 2581319 • Letter: E
Question
Exercise 23-21 The information shown below was taken from the annual manufacturing overhead cost budget of Samantha Company Variable manufacturing overhead costs Fixed manufacturing overhead costs Normal production level in labor hours Normal production level in units Standard labor hours per unit $41,568 $19,485 12,990 4,330 During the year, 4,140 units were produced, 19,700 hours were worked, and the actual manufacturing overhead was $59,574. Actual fixed manufacturing overhead costs equaled budgeted fixed manufacturing overhead costs. Overhead is applied on the basis of direct labor hours. Compute the total, fixed, and variable predetermined manufacturing overhead rates. (Round answers to 2 decimal places, e.g. 1.25.) Item Variable overhead Rate $ Fixed overhead Total overhead LINK TO TEXTExplanation / Answer
Actual units produced = 4140
Actual hours worked = 19700
Actual manufacturing overhead = 59574
Actual fixed overhead ( equaled budgeted overhead) = 19485
Actual variable overhead = Total - fixed = 59574 - 19485 = 40089
Overhead is applied on the bases of direct labor hours.
Variable overhead rate = 40089 / 19700 = $ 2.03 per hour
Fixed overhead rate = 19485 / 19700 = $ 0.99 per hour
Total overhead rate = 59574 / 19700 = $ 3.02 per hour
Total overhead variance = Standard overhead on actual output - actual overhead
= 58374 - 59574 = 1200 (U)
Working :-
Standard total overhead = variable + fixed
= 41568 + 19485
= $ 61053
Standard output = 4330 units
Standard overhead rate per unit =61053 / 4330 = 14.1
Actual units produced = 4140
Standard overhead for actual output = 4140 * 14.1 = $ 58374
Overhead controllable variance :-
Actual factory overhead = 59574
less : Standard fixed overhead =(19485)
less : Standard variable overhead for actual output = (39744)
Controllable variance = 345 (U)
Working :-
Standard hours worked = 12990
Standard variable overhead = 41568
Standard variable overhead rate = 41568 / 12990 = 3.2 per hour
Standard labor hour per unit = 3
Actual output = 4140
Standard labour hour for actual output = 4140 * 3 = 12420
Standard variable overhead for actual output = 12420 * 3.2 = 39744
Overhead volume variance :-
Standard fixed overhead = 19485
Plus : Standard varibale overhead for actual output = 39744
Less : overhead charged to production as per standard rate = (58374)
Overhead volume variance = 855 (F)
Working:-
Total standard overhead = variable + fixed = 41568 + 19485 = 61053
Normal production level in labor hours = 12990
Standard overhead rate at normal production level = 61053 / 12990 = $ 4.7 per hour
Standard labour hour for actual output = 12420
overhead charged to production as per standard rate = 12420 * 4.7 = $ 58374
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