Question

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) Calculating factory overhead: two variances Munoz Manufacturing Co. normally produces 12,000 units of product X each month. Each unit requires 2.5 hours of direct labor, and factory overhead is applied on a direct labor hour basis. Fixed costs and variable costs in factory overhead at the normal capacity are $3.00 and $2.00 per direct labor hour, respectively. Cost and production data for May follow:

Production for the month 11,000 UNITS

Direct labor hours used 22,500 HOURS

Factory overhead incurred for:

: Variable costs $33,000

Fixed costs $60,500

a. Calculate the flexible-budget variance.

b. Calculate the production-volume variance.

c. Was the total factory overhead under- or overapplied? By what amount?

Homework Answers

Answer #1

1. Flexible budget variance = Actual overhead -budgeted overhead for the actual level of production

2500 = 110,000- budgeted overhead for the actual level of production

Budgeted overhead for the actual level of production = 110,000 +2500 = 112500

2. Flexible budget for actual production level:

Budgeted labor for actual production = 2.5 hours * 11000 units = 27500

Budgeted factory overheads = Variable cost + Fixed overhead = (27500 * 2) + (12000*2.5* 3) = 145000

a. Flexible-budget variance = Actual overheads - Budgeted factory overhead for actual production = (33000+60500) - 145000 = 51500 F

b.Production volume variance = Flexible budget for actual production level - Factory overhead applied

= 145000 - ( 11000 *2.5* 5)

= 7500 UF

c. Underapplied by 7500

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
The overhead application rate for a company is 10$ per unit, made up of $6 per...
The overhead application rate for a company is 10$ per unit, made up of $6 per unit fixed overhead and 4$ per unit of variable overhead. Normal capacity is 10000 units. In one month there was a favoeable flexibe budgeted variance of 2500$. Actual overhead for the month was 110.000$ abd actual units produced were 13125. Determine the amount of the budgeted overhead for the actual level of production.
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...
Q7. Trini Inc. bases its manufacturing overhead budget on budgeted direct labor-hours. The direct labor budget...
Q7. Trini Inc. bases its manufacturing overhead budget on budgeted direct labor-hours. The direct labor budget indicates that 9,100 direct labor-hours will be required in May. The variable overhead rate is $2.60 per direct labor-hour. The company's budgeted fixed manufacturing overhead is $100,440 per month, which includes depreciation of $8,910. All other fixed manufacturing overhead costs represent current cash flows. The May cash disbursements for manufacturing overhead on the manufacturing overhead budget should be? Q8. The following data pertains to...
Edney Company employs a standard cost system for product costing. The per-unit standard cost of its...
Edney Company employs a standard cost system for product costing. The per-unit standard cost of its product is Raw materials $ 14.50 Direct labor (2 direct labor hours × $8.00 per hour) 16.00 Manufacturing overhead (2 direct labor hours × $11.00 per hour) 22.00 Total standard cost per unit $ 52.50 The manufacturing overhead rate is based on a normal capacity level of 600,000 direct labor hours. (Normal capacity is defined as the level of capacity needed to satisfy average...
Flexible Overhead Budget Wiki Wiki Company has determined that the variable overhead rate is $3.8 per...
Flexible Overhead Budget Wiki Wiki Company has determined that the variable overhead rate is $3.8 per direct labor hour in the Fabrication Department. The normal production capacity for the Fabrication Department is 9,000 hours for the month. Fixed costs are budgeted at $47,700 for the month. a. Prepare a monthly factory overhead flexible budget for 8,000, 9,000, and 10,000 hours of production. Enter all amounts as positive numbers. Wiki Wiki Company Monthly Factory Overhead Cost Budget-Fabrication Department Direct labor hours...
True-False ____1. Budgeted overhead cost rates can be expressed as an amount per unit of output...
True-False ____1. Budgeted overhead cost rates can be expressed as an amount per unit of output or per unit of input. ____2. There is no fundamental difference between the budgeted variable-overhead cost rate per unit of input and the budgeted price of individual direct materials. ____3. The variable-overhead spending variance is unfavorable if the actual variable overhead cost rate per unit of input (the cost-allocation base) is greater than the budgeted variable overhead cost rate per unit of input. ____4....
Crystal Glassware Company has the following standards and flexible-budget data.       Standard variable-overhead rate $...
Crystal Glassware Company 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 $ 120,000 Budgeted output 20,000 units    Actual results for April are as follows:       Actual output 14,000 units Actual variable overhead $ 252,000 Actual fixed overhead $ 111,000 Actual direct labor 40,000 hours Required: Use the variance formulas to compute the following variances. (Indicate...
Direct Materials, Direct Labor, and Reports budgeted and actual costs for variable and fixed factory overhead...
Direct Materials, Direct Labor, and Reports budgeted and actual costs for variable and fixed factory overhead along with the related controllable and volume variances.Factory Overhead Cost Variance Analysis Mackinaw Inc. processes a base chemical into plastic. A detailed estimate of what a product should cost.Standard costs and actual costs for direct materials, direct labor, and factory overhead incurred for the manufacture of 6,800 units of product were as follows: Standard Costs Actual Costs Direct materials 8,800 lb. at $4.90 8,700...
The following information relates to Gouws Manufacturing's overhead costs for the month: Static budget variable overhead...
The following information relates to Gouws Manufacturing's overhead costs for the month: Static budget variable overhead $14,200 Static budget fixed overhead $5,600 Static budget direct labor hours 1,000 hours Static budget number of units 5,000 units Welty allocates manufacturing overhead to production based on standard direct labor hours. Welty reported the following actual results for last month: actual variable overhead, $ 14,500; actual fixed overhead, $ $5,400; actual production of 4,700 units at 0.22 direct labor hours per unit. The...
20. Flapjack Corporation had 8,002 actual direct labor hours at an actual rate of $12.00 per...
20. Flapjack Corporation had 8,002 actual direct labor hours at an actual rate of $12.00 per hour. Original production had been budgeted for 1,100 units, but only 994 units were actually produced. Labor standards were 7.6 hours per completed unit at a standard rate of $12.86 per hour. The direct labor rate variance is a.$6,881.72 unfavorable b.$6,881.72 favorable c.$5,577.18 unfavorable d.$5,577.18 favorable 21. Flapjack Corporation had 7,768 actual direct labor hours at an actual rate of $12.08 per hour. Original...