Question

Haylock Inc. bases its manufacturing overhead budget on budgeted direct labor-hours. The direct labor budget indicates that 7,400 direct labor-hours will be required in August. The variable overhead rate is $1.60 per direct labor-hour. The company's budgeted fixed manufacturing overhead is $100,400 per month, which includes depreciation of $8,950. All other fixed manufacturing overhead costs represent current cash flows. The August cash disbursements for manufacturing overhead on the manufacturing overhead budget should be:

Multiple Choice

• $11,840

• $103,290

• $112,240

• $91,450

3.

Brummer Corporation makes a product whose variable overhead standards are based on direct labor-hours. The quantity standard is 0.1 hours per unit. The variable overhead rate standard is $8.00 per hour. In January the company produced 8,700 units using 810 direct labor-hours. The actual variable overhead rate was $7.80 per hour.

The variable overhead rate variance for January is:

Multiple Choice

• $162 U

• $91 U

• $162 F

• $91 F

3.

Ravena Labs., Inc. makes a single product which has the following standards:

Direct materials: 2.5 ounces at $20 per ounce

Direct labor: 1.4 hours at $12.50 per hour

Variable manufacturing overhead: 1.4 hours at 3.50 per hour

Variable manufacturing overhead is applied on the basis of standard direct labor-hours. The following data are available for October:

• 3,750 units of compound were produced during the month.
• There was no beginning direct materials inventory.
• Direct materials purchased: 12,000 ounces for $225,000.
• The ending direct materials inventory was 2,000 ounces.
• Direct labor-hours actually worked: 5,800 hours at a cost of $67,200.
• Variable manufacturing overhead costs incurred amounted to $18,200.
• Variable manufacturing overhead applied to products: $18,375.

The labor efficiency variance for October is:

Answer 1

Solution-1: $103290 Correct Answer
Variable Manufacturign Overhead	$11,840.00
(7400DLHX $1.60)
Budgeted Fixed Manufacturing OH excluding Depreciation (100400-8950)	$91,450.00
Cash Disbursement of Manufacturing Overhead	$103,290.00

Soluton-2: $162 F is Correct Answer

Variable OH Rate Variance= ( SR-AR) Actual Hour

(8-7.80)810 Hour= $162 Favourable

Solution-3

Labour Efficiency Variance= (SH-AH)SR

((3750 UnitX 1.4 Hour)-5800 Hour)X $12.50= $6875 UF