Exercise 11-23 The information shown below was taken from the annual manufacturi
ID: 2583158 • Letter: E
Question
Exercise 11-23 The information shown below was taken from the annual manufacturing overhead cost budget of Connick Company. $28,520 $9,200 9,200 4,600 Variable manufacturing overhead costs Fixed manufacturing overhead costs Normal production level in labor hours Normal production level in units Standard labor hours per unit During the year, 4,400 units were produced, 18,100 hours were worked, and the actual manufacturing overheac was $37,880. 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 Fixed overhead Total overhead Rate s
Explanation / Answer
Ans:
Predetermined Variable overhead Rate=$28520/9200=$3.1 per labor hour
Predetermined Fixed overhead Rate=$9200/9200=$1
Total Manufacturing overhead rate=$3.1+$1=$4.1 per labor hour,
Total Overhead variance=Actual overhead cost-applied overhead cost
= $37880-4400*2*4.1
= $37880-$36080=$1800(unfavorable)
Overhead controllable variance
=Actual overhead cost-budgeted allowance based on standard hour allowed
= $37880-($28520+9200)
=$160(unfavorable)
Overhead volume variance: predetermine fixed overhead rate*(normal capacity hours-standard hour allowed for actual production)
= 1(9200-8800)
= $400
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