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

Answer 1

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	$ 2,12,800.00

• 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