Question

Weller Company’s flexible budget for manufacturing overhead (in condensed form) follows:     Cost     Formula          (per machine       &n

Weller Company’s flexible budget for manufacturing overhead (in condensed form) follows:
    Cost
    Formula
         (per machine         Machine-Hours  
Overhead Costs            hour)  8,000    9,000    10,000
Variable costs   $1.05  $ 8,400 $ 9,450 $10,500
Fixed costs       24,800   24,800   24,800
Total Overhead Costs    $33,200 $34,250 $35,300

The following information is available for a recent period:
a. The denominator activity of 8,000 machine-hours was chosen to compute the predetermined overhead rate.
b. At the 8,000 standard machine-hours level of activity, the company should produce 3,200 units of product.
c. The company’s actual operating results were as follows:

  Number of units produced  3,500
  Actual machine-hours   8,500
  Actual variable overhead costs         $9,860
  Actual fixed overhead costs         $25,100
Required:
1. Compute the predetermined overhead rate and break it down into variable and fixed cost elements.
2. What were the standard hours allowed for the year’s output?
3. Compute the variable overhead spending and efficiency variances and the fixed overhead budget and volume variances.

Predetermined Overhead Rate =      ________________

Variable Portion of the Predetermined Overhead Rate = ________________

Fixed Portion of the Predetermined Overhead Rate =  ________________

The Standard Hours Allowed for the year’s output =   ________________

Variable Overhead Spending Variance =     ________________

Variable Overhead Efficiency Variance =     ________________

Fixed Overhead Budget Variance =     ________________

Fixed Overhead Volume Variance =     ________________

Homework Answers

Answer #1
Req 1:
Pre-determined OH rate:
Variable OH per MH 1.05
Fixed H per MH (24800/8000) 3.1
OH rate per MH 4.15
Req 2:
Actual output: 3500 units
Std hours per unit (8000/3200) 2.5
Std hours allowed 8750
Req 3:
Vriabble Oh spending Variance: Std OH cost for actual output - Actual variable OH
8750 hours*1.05 - 9860 = $ 672.50 Unfav
Variable OH efficiency variance: Std rate per hour (Std hours-Actual hours)
1.05 (8750-8500)= 262.50 Favorable
Fixed OH budget variance: Budgeted Fixed OH-Actual fixed OH
24800 -25100 = 300 Unfavorable
Fixed OH volume variance: Std Fixed Oh for actual output -Budgetdd Fixed Oh
8750*3.10 - 24800 = 2325 Favorable
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
WWW Company’s flexible budget for manufacturing overhead follows: Account Machine Hours Machine Hours Machine Hours 8,000...
WWW Company’s flexible budget for manufacturing overhead follows: Account Machine Hours Machine Hours Machine Hours 8,000 9,000 10,000 Variable Overhead $10,000 $11,250 $12,500 Fixed Overhead $28,000 $28,000 $28,000 Total Overhead Costs $38,000 $39,250 $40,500             The following additional information is available for the most recent period: The activity level of 8,000 machine hours was chosen to compute the predetermined overhead rate At 8,000 machine hours level of activity the company should produce 3,200 units of output The company’s actual operating...
Question 4: Eric Co. uses machine hours to apply standard overhead cost to production. The following...
Question 4: Eric Co. uses machine hours to apply standard overhead cost to production. The following data pertain to October: Master budget data: Units 2,500 Total machine hours (denominator volume) 100,000 Total variable overhead cost $ 250,000 Total fixed overhead cost $ 50,000 Actual operating results: Variable overhead cost incurred $ 265,000 Fixed overhead cost incurred $ 54,000 Units manufactured 2,250 Total machine hours 96,000 Required: Compute the following variances using machine hours as the activity variable used to assign...
The following information is available for Baxter Manufacturing for April: Actual machine hours 980 Standard machine...
The following information is available for Baxter Manufacturing for April: Actual machine hours 980 Standard machine hours allowed 1,040 Denominator activity (machine hours) 1,700 Actual fixed overhead costs $ 6,600 Budgeted fixed overhead costs $ 6,800 Predetermined overhead rate ($1 variable + $4 fixed) $ 5 Is the fixed overhead price (spending) variance for April favorable or unfavorable? show work
Alden Company uses a two-variance analysis for overhead variances. Practical capacity is defined as 36 setups...
Alden Company uses a two-variance analysis for overhead variances. Practical capacity is defined as 36 setups and 36,000 machine hours to manufacture 7,200 units for the year. Selected data for 2016 follow:   Budgeted fixed factory overhead:      Setup   $ 57,600         Other 265,000 $ 322,600   Total factory overhead incurred $ 494,000   Variable factory overhead rate:      Per setup $ 650      Per machine hour $ 4   Total standard machine hours allowed for the units manufactured 24,000 hours   Machine hours actually worked 28,000 hours...
Primara Corporation has a standard cost system in which it applies overhead to products based on...
Primara Corporation has a standard cost system in which it applies overhead to products based on the standard direct labor-hours allowed for the actual output of the period. Data concerning the most recent year appear below:   Total budgeted fixed overhead cost for the year $495,900   Actual fixed overhead cost for the year $486,000   Budgeted standard direct labor-hours (denominator level of activity) 57,000   Actual direct labor-hours 58,000   Standard direct labor-hours allowed for the actual output 55,000 Required: 1. Compute the fixed...
Alden Company uses a two-variance analysis for overhead variances. Practical capacity is defined as 36 setups...
Alden Company uses a two-variance analysis for overhead variances. Practical capacity is defined as 36 setups and 36,000 machine hours to manufacture 7,200 units for the year. Selected data for 2016 follow:   Budgeted fixed factory overhead:      Setup   $ 57,600         Other 265,000 $ 322,600   Total factory overhead incurred $ 494,000   Variable factory overhead rate:      Per setup $ 650      Per machine hour $ 4   Total standard machine hours allowed for the units manufactured 24,000 hours   Machine hours actually worked 28,000 hours...
Riviera Beach Pink Flamingos has the following standards and flexible-budget data. Standard variable-overhead rate $6.00 per...
Riviera Beach Pink Flamingos has the following standards and flexible-budget data. Standard variable-overhead rate $6.00 per direct-labor hour Standard quantity of direct labor 2 hours per unit of output Budgeted fixed overhead $100,000 Budgeted output 25,000 units Actual results for April are as follows: Actual output 20,000 units Actual variable overhead $320,000 Actual fixed overhead $97,000 Actual direct labor 50,000 hours Required: 1.Use the variance formulas to compute the following variances .Indicate whether each variance is favorable or unfavorable,where appropriate...
Exercise 10A-1 Fixed Overhead Variances [LO10-4] Primara Corporation has a standard cost system in which it...
Exercise 10A-1 Fixed Overhead Variances [LO10-4] Primara Corporation has a standard cost system in which it applies overhead to products based on the standard direct labor-hours allowed for the actual output of the period. Data concerning the most recent year appear below: Total budgeted fixed overhead cost for the year $ 530,400 Actual fixed overhead cost for the year $ 521,000 Budgeted direct labor-hours (denominator level of activity) 68,000 Actual direct labor-hours 69,000 Standard direct labor-hours allowed for the actual...
  Standard variable overhead rate per hour $1   Standard fixed overhead rate per hour $2   Planned monthly...
  Standard variable overhead rate per hour $1   Standard fixed overhead rate per hour $2   Planned monthly activity 40,000 machine hours   Actual production completed 82,000 units   Standard machine processing time Two units per hour   Actual variable overhead $37,000   Actual total overhead $121,000   Actual machine hours worked 40,500                   All of the company's overhead is variable or fixed in nature.                                      Required:                   1.     Calculate the spending and efficiency variances for variable overhead.                   2.     Calculate the SPENDING and PRODUCTION volume variances for fixed overhead.
Overhead Variances, Four-Variance Analysis Oerstman, Inc., uses a standard costing system and develops its overhead rates...
Overhead Variances, Four-Variance Analysis Oerstman, Inc., uses a standard costing system and develops its overhead rates from the current annual budget. The budget is based on an expected annual output of 125,000 units requiring 500,000 direct labor hours. (Practical capacity is 520,000 hours.) Annual budgeted overhead costs total $830,000, of which $585,000 is fixed overhead. A total of 119,100 units using 498,000 direct labor hours were produced during the year. Actual variable overhead costs for the year were $261,100, and...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT