Question

Fixed Overhead Variances Petra Company uses standard costs for cost control and internal reporting. Fixed costs...

Fixed Overhead Variances
Petra Company uses standard costs for cost control and internal reporting. Fixed costs are budgeted at $40,000 per month at a normal operating level of 10,000 units of production output. During October, actual fixed costs were $45,000 and actual production output was 12,000 units

a. Determine the fixed overhead budget variance.
$AnswerAnswerUF

b. Assume that the company applied fixed overhead to production on a per-unit basis. Determine the fixed overhead volume variance.
$AnswerAnswerUF

Business   Accounting   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

a. Fixed overhead budget variance = Actual Fixed Cost - Budgeted Fixed Cost

= $45,000 - $40,000

= $5,000 Unfavoravble

b. If Comapny applied fixed overhead to production on a per unit basis, then

Standard Fixed cost per Unit = Budgeted Cost / Budgeted Unit

= $40,000 / 10,000 units = $4 per unit

Standard Fixed cost = Standard cost per unit x Actual Unit

= $4 X 12,000 = $48,000

Now, Fixed Overhead Volume Variance = Budgeted Fixed Cost -  Standard Fixed cost

= $40,000 - $48,000

= $(8,000) favorable

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Petra Company uses standard costs for cost control and internal reporting. Fixed costs are budgeted at...
Petra Company uses standard costs for cost control and internal reporting. Fixed costs are budgeted at $36,000 per month at a normal operating level of 10,000 units of production output. During October, actual fixed costs were $40,000, and actual production output was 12,000 units. Required a Determine the fixed overhead budget variance. b Assume that the company applied fixed overhead to production on a per-unit basis. Determine the fixed overhead volume variance. Was the fixed overhead budget variance from requirement...
Fixed Overhead Variances Assume that ExxonMobil uses a standard cost system for each of its refineries....
Fixed Overhead Variances Assume that ExxonMobil uses a standard cost system for each of its refineries. For the Houston refinery, the monthly fixed overhead budget is $8,300,000 for a planned outputs of 5,000,000 barrels. For September, the actual fixed cost was $8,650,000 for 5,100,000 barrels. a. Determine the fixed overhead budget variance. $Answer U or F b. If fixed overhead is applied on a per-barrel basis, determine the volume variance. $Answer U or F
Patel and Sons, Inc., uses a standard cost system to apply overhead costs to units produced....
Patel and Sons, Inc., uses a standard cost system to apply overhead costs to units produced. Practical capacity for the plant is defined as 55,500 machine hours per year, which represents 27,750 units of output. Annual budgeted fixed overhead costs are $277,500 and the budgeted variable overhead cost rate is $3.80 per unit. Factory overhead costs are applied on the basis of standard machine hours allowed for units produced. Budgeted and actual output for the year was 21,600 units, which...
Patel and Sons, Inc., uses a standard cost system to apply overhead costs to units produced....
Patel and Sons, Inc., uses a standard cost system to apply overhead costs to units produced. Practical capacity for the plant is defined as 55,800 machine hours per year, which represents 27,900 units of output. Annual budgeted fixed overhead costs are $279,000 and the budgeted variable overhead cost rate is $3.90 per unit. Factory overhead costs are applied on the basis of standard machine hours allowed for units produced. Budgeted and actual output for the year was 21,700 units, which...
1) Determining Budgeted Overhead The overhead application rate for a company is $12 per unit, made...
1) Determining Budgeted Overhead The overhead application rate for a company is $12 per unit, made up of $7 per unit of fixed overhead and $5 per unit of variable over- head. Normal capacity is 10,000 units. In one month, there was a favorable flexible budget variance of $2,500. Actual overhead for the month was $110,000 and actual units produced were 15,125. Based on this information, determine the amount of the budgeted overhead for the actual level of production. 2)...
Melton Products uses standard costing. It allocates manufacutring overhead (both variable and fixed) to products on...
Melton Products uses standard costing. It allocates manufacutring overhead (both variable and fixed) to products on the basis of standard direct manufacturing labor hours (DLH). Melton develops its manufacturing overbead rate from teh current annual budget. THe manufacturing overhead budget for 2018 is based on budgeted output of 720,000 units requiring 3,600,000 DLH. The company is able to schedule production uniformly throughout the year. A total of 66,000 output unuits requiring 315,000 DLH was produced during May 2018. Budgeted hours...
Maxwell Company uses a standard cost accounting system and applies production overhead to products on the...
Maxwell Company uses a standard cost accounting system and applies production overhead to products on the basis of machine hours. The following information is available for the most recent month: Machine-hour standard: Two machine hours per unit Standard fixed overhead rate: $20 per machine hour Actual production: 15,000 units Under-applied fixed overhead: $50,000 Fixed overhead budget variance: $30,000 favorable The budgeted fixed overhead and the fixed overhead volume variance, respectively, are $620,000 and $20,000 $680,000 and -$80,000 $650,000 and $50,000...
Patel and Sons Inc. uses a standard cost system to apply factory overhead costs to units...
Patel and Sons Inc. uses a standard cost system to apply factory overhead costs to units produced. Practical capacity for the plant is defined as 55,200 machine hours per year, which represents 27,600 units of output. Annual budgeted fixed factory overhead costs are $276,000 and the budgeted variable factory overhead cost rate is $3.70 per unit. Factory overhead costs are applied on the basis of standard machine hours allowed for units produced. Budgeted and actual output for the year was...
Patel and Sons, Inc., uses a standard cost system to apply overhead costs to units produced....
Patel and Sons, Inc., uses a standard cost system to apply overhead costs to units produced. Practical capacity for the plant is defined as 55,500 machine hours per year, which represents 27,750 units of output. Annual budgeted fixed overhead costs are $277,500 and the budgeted variable overhead cost rate is $3.80 per unit. Factory overhead costs are applied on the basis of standard machine hours allowed for units produced. Budgeted and actual output for the year was 21,600 units, which...
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