Question

Gerhan Company's flexible budget for the units manufactured in May shows $15,400 of total factory overhead;...

Gerhan Company's flexible budget for the units manufactured in May shows $15,400 of total factory overhead; this output level represents 70% of available capacity. During May, the company applied overhead to production at the rate of $3.00 per direct labor hour (DLH), based on a denominator volume level of 5,850 DLHs, which represents 90% of available capacity. The company used 6,000 DLHs and incurred $16,600 of total factory overhead cost during May, including $7,300 of fixed factory overhead.


What is the fixed overhead production-volume variance (to the nearest whole dollar) for Gerhan Company in May? (Round your intermediate calculation to 2 decimal places.)

Multiple Choice

  • $575 unfavorable.

  • $1,755 unfavorable.

  • $1,255 unfavorable.

  • $1,075 unfavorable.

  • $775 unfavorable.

Homework Answers

Answer #1

$ 1755 unfavorable

Total budgeted overhead at 90% capacity(denominator volume level) =5850*3=$ 17550

Total budgeted overhead at 70% capacity=$ 15400

Change on budgeted overhead 90% vs 70% of capacity= 17550-15400=$ 2150

If 5850 hours = 90% capacity then 5850/0.9*.7=4550 at 70% capacity

change on budgeted overhead hours from 90% to 70% = 5850-4550=1300 hrs.

change in dollars/change in hours= 2150/1300=variable overhead rate 1.653 per direct labour hour

Total overhead rate=$ 3(given)

Total overhead rate-variable overhead rate= fixed overhead rate

=$ 3 - $ 1.65= $ 1.35

1300 unfavorable difference in hours* fixed overhead rate= 1300*1.35=$ 1755 unfavorable fixed production-volume variance

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
Gerhan Company's flexible budget for the units manufactured in May shows $15,640 of total factory overhead;...
Gerhan Company's flexible budget for the units manufactured in May shows $15,640 of total factory overhead; this output level represents 70% of available capacity. During May, the company applied overhead to production at the rate of $3.00 per direct labor hour (DLH), based on a denominator volume level of 6,120 DLHs, which represents 90% of available capacity. The company used 5,000 DLHs and incurred $16,500 of total factory overhead cost during May, including $6,800 for fixed factory overhead. What is...
Gerhan Company's flexible budget for the units actually manufactured in May shows $15,640 of total factory...
Gerhan Company's flexible budget for the units actually manufactured in May shows $15,640 of total factory overhead; this output level represents 70% of available capacity. During May the company applied overhead to production at the rate of $3.00 per direct labor hour (DLH), based on a denominator volume level of 6,120 DLHs, which represents 90% of available capacity. The company used 5,000 DLHs and incurred $16,500 of total factory overhead cost during May, including $6,800 for fixed factory overhead. What...
Gerhan Company's flexible budget for the units manufactured in May shows $15,750 of total factory overhead;...
Gerhan Company's flexible budget for the units manufactured in May shows $15,750 of total factory overhead; this output level represents 70% of available capacity. During May, the company applied overhead to production at the rate of $3.00 per direct labor hour (DLH), based on a denominator volume level of 5,940 DLHs, which represents 90% of available capacity. The company used 5,000 DLHs and incurred $16,200 of total factory overhead cost during May, including $6,800 of fixed factory overhead. What is...
Gerhan Company's flexible budget for the units manufactured in May shows $15,420 of total factory overhead;...
Gerhan Company's flexible budget for the units manufactured in May shows $15,420 of total factory overhead; this output level represents 70% of available capacity. During May, the company applied overhead to production at the rate of $3.00 per direct labor hour (DLH), based on a denominator volume level of 6,030 DLHs, which represents 90% of available capacity. The company used 6,000 DLHs and incurred $18,400 of total factory overhead cost during May, including $6,900 for fixed factory overhead. What is...
Gerhan Company's flexible budget for the units manufactured in May shows $15,640 of total factory overhead;...
Gerhan Company's flexible budget for the units manufactured in May shows $15,640 of total factory overhead; this output level represents 70% of available capacity. During May, the company applied overhead to production at the rate of $3.00 per direct labor hour (DLH), based on a denominator volume level of 6,120 DLHs, which represents 90% of available capacity. The company used 5,000 DLHs and incurred $16,500 of total factory overhead cost during May, including $6,800 for fixed factory overhead. What is...
1) Zero Company's standard factory overhead rate is $3.75 per direct labor hour (DLH), calculated at...
1) Zero Company's standard factory overhead rate is $3.75 per direct labor hour (DLH), calculated at 90% capacity = 900 standard DLHs. In December, the company operated at 80% of capacity, or 800 standard DLHs. Budgeted factory overhead at 80% of capacity is $3,150, of which $1,350 is fixed overhead. For December, the actual factory overhead cost was $3,800 for 840 actual DLHs, of which $1,300 was for fixed factory overhead. Assuming the use of a two-way breakdown (decomposition) of...
Bluecap Co. uses a standard cost system and flexible budgets for control purposes. The following budgeted...
Bluecap Co. uses a standard cost system and flexible budgets for control purposes. The following budgeted information pertains to 2019: Denominator volume—number of units 8,000 Denominator volume—percent of capacity 80 % Denominator volume—standard direct labor hours (DLHs) 24,000 Budgeted variable factory overhead cost at denominator volume $ 103,200 Total standard factory overhead rate per DLH $ 15.10 During 2019, Bluecap worked 28,000 DLHs and manufactured 9,600 units. The actual factory overhead cost for the year was $14,000 greater than the...
Zero Company's standard factory overhead application rate is $3.77 per direct labor hour (DLH), calculated at...
Zero Company's standard factory overhead application rate is $3.77 per direct labor hour (DLH), calculated at 90% capacity = 1,000 standard DLHs. In December, the company operated at 80% of capacity, or 889 standard DLHs. Budgeted factory overhead at 80% of capacity is $3,100, of which $1,420 is fixed overhead. For December, the actual factory overhead cost incurred was $3,760 for 930 actual DLHs, of which $1,370 was for fixed factory overhead. If Zero Company uses a two-way breakdown (decomposition)...
Bluecap Co. uses a standard cost system and flexible budgets for control purposes. The following budgeted...
Bluecap Co. uses a standard cost system and flexible budgets for control purposes. The following budgeted information pertains to 2019: Denominator volume—number of units 7,000 Denominator volume—percent of capacity 70 % Denominator volume—standard direct labor hours (DLHs) 35,000 Budgeted variable factory overhead cost at denominator volume $ 102,700 Total standard factory overhead rate per DLH $ 15.10 During 2019, Bluecap worked 44,000 DLHs and manufactured 9,000 units. The actual factory overhead cost for the year was $15,000 greater than the...
Flexible Overhead Budget Leno Manufacturing Company prepared the following factory overhead cost budget for the Press...
Flexible Overhead Budget Leno Manufacturing Company prepared the following factory overhead cost budget for the Press Department for October of the current year, during which it expected to require 8,000 hours of productive capacity in the department: Variable overhead cost:    Indirect factory labor $70,400    Power and light 3,520    Indirect materials 17,600       Total variable overhead cost $91,520 Fixed overhead cost:    Supervisory salaries $32,030    Depreciation of plant and equipment 20,130    Insurance and property taxes 12,810       Total fixed overhead cost 64,970 Total factory...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT