Question

1-

Denver Enterprises recently used 14,000 labor hours to produce 7,500 completed units. According to manufacturing specifications, each unit is anticipated to take two hours to complete. The company's actual payroll cost amounted to OMR 158,200. If the standard labor cost per hour is OMR 11, Denver's labor efficiency variance is:

Select one:

a. 11,000 F

b. 11,300 UNF

c. 11,000 UNF

d. 11,300 F

2-

The following data pertain to the current year:
Budgeted manufacturing overhead:                     OMR 450,000
Actual manufacturing overhead:                          OMR 390,000
Budgeted machine hours:                                                 30,000 hrs.
Actual machine hours:                                          33,000 hrs.
Overhead applied to production totaled:

Select one:

a.
495,000

b.
435,000

c.
449,000

d.
355,000

Answer 1

Question 1:

Answer: a. 11,000 F

Calculation:

Labor efficiency variance = (Standard Hours - Actual Hours) * Standard Rate

Standard hours = 7,500 Units * 2 hours = 15,000 hours

Actual Hours = 14,000 hours

Standard Rate = OMR 11

Labor efficiency variance = (15,000 hours - 14,000 hours) * OMR 11                                               = 1,000 hours * OMR 11                                               = OMR 11,000 Favorable

Question 2:

Answer: a. 495,000

Calculation:

Overhead applied = Actual Machine hours * Predetermined overhead rate per machine hour

Predetermined overhead rate per machine hour

= Budgeted manufacturing overhead / Budgeted Machine hours

= OMR 450,000 / 30,000 hours

= OMR 15 per hour

Overhead applied = 33,000 Hours * OMR 15 per hour = OMR 495,000

All the best...