The Brown Manufacturing Company\'s costing system has two direct-cost categories
ID: 2607130 • Letter: T
Question
The Brown Manufacturing Company's costing system has two direct-cost categories: direct materials and direct manufacturing labor. Manufacturing overhead (both variable and fixed) is allocated to products on the basis of standard direct manufacturing labor hours (DLH). At the beginning of
2014 Brown adopted the following standards for its manufacturing costs:
Direct materials
3 lbs. at $4 per lb.
$12.00
Direct manufacturing labor
4 hrs. at $20 per hr.
80.00
Manufacturing overhead:
Variable
$6 per DLH
24.00
Fixed
$7 per DLH
28.00
Standard manufacturing cost per output unit
$144.00
The denominator level for total manufacturing overhead per month in
2014 is 37,000 direct manufacturing labor-hours
Brown's flexible budget for January 2014
was based on this denominator level. The records for January indicated the following:
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Direct materials purchased
26,300 lb. at $3.80 per lb.
Direct materials used
23,300 lb.
Direct manufacturing labor
28,400 hrs. at $19.60 per hr.
Total actual manufacturing overhead (variable and fixed)
$500,000
Actual production
7,600 output units
Actual Input Qty.
Actual Costs
x
Flexible
Allocated
Incurred
Budgeted Price
Budget
Overhead
Variable Manuf. OH
$170,400
$182,400
$182,400
Finally, complete the table for fixed overhead.
Same Budgeted Lump
Actual Costs
Sum Regardless
Flexible
Allocated
Incurred
of Output Level
Budget
Overhead
Fixed Manuf. OH
$259,000
$259,000
$212,800
e.
The total manufacturing overhead spending variance is $
70,600
U
f.
The variable manufacturing overhead efficiency variance is $
U
Direct materials
3 lbs. at $4 per lb.
$12.00
Direct manufacturing labor
4 hrs. at $20 per hr.
80.00
Manufacturing overhead:
Variable
$6 per DLH
24.00
Fixed
$7 per DLH
28.00
Standard manufacturing cost per output unit
$144.00
Explanation / Answer
Answer for subpoint e:
Formula for manufacturing overhead spending variance = Actual quantity (Standard price per hour - Actual price per hour)
=7600*$20*4 -$650,000
=$608000 -$650,000
=$42000(U).
Answer for subpoint f:
Actual manufacturing overhead for the month =$650,000.
fixed manufacturing overhead =37,000 * 7
=$ 259000
Actual variable manufacturing overhead =$650,000 -$259,000
=$ 391000
Fixed Mfg OH Table Actual Cost Incurred Actual Input Qty x Budgeted Rate Flexible Budget Allocated OH Fixed Mfg OH Not Provided $ 2,59,000.00 $ 2,59,000.00 $ 2,12,800.00Related Questions
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