Question

In: Accounting

The manufacturing overhead costs are applied to products on the basis of machine time. Unfortunately, due...

The manufacturing overhead costs are applied to products on the basis of machine time. Unfortunately, due to system glitch, several numbers and labels have been omitted from the analysis of fixed overhead below. Supply the missing numbers and labels to help out:

1) Assume 6 minutes of machine time is standard per unit of production. How many units were actually produced in this situation?

Actual Fixed Overhead Cost

Flexible Budget Overhead Cost

Fixed Overhead Cost Applied to Work in Progress

(a)

(b)

302,100 MH x $1.08 = (c)

Budget variance, $1,880 U

(d)

Total variance, $388 F

(e

Solutions

Expert Solution

6 minutes of machine time is standard per unit of production. How many units were actually produced in this situation?

Actual units produced          3,021,000
Fixed Overhead Cost Applied to Work in Progress (302100*1.08) $         326,268
Fixed Overhead Cost Applied to Work in Progress $         326,268
Less: Total variance $                  388
Actual Fixed Overheads $         325,880
Actual Fixed Overheads $         325,880
Less: Budget variance $              1,880
Budgeted Fixed Overheads (or Flexible Budget Overhead Cost) $         324,000
Minus sign indicate Favorable variance.
Budgeted Fixed Overheads (or Flexible Budget Overhead Cost) $         324,000
Fixed Overhead Cost Applied to Work in Progress $         326,268
Fixed Overhead Volume Variance $            (2,268)
Indicate Favorable
MH means machine hours
Budgeted overhead rate per unit (6 minutes = 6/60 = 0.10 hours) (1.08 *0.10 ) $              0.108
Fixed Overhead Cost Applied to Work in Progress $         326,268
Divided by: Budgeted overhead rate per unit $              0.108
Actual units produced          3,021,000
Budgeted Fixed Overheads $         324,000
Divided by: Budgeted overhead rate per unit $              0.108
Budgeted units          3,000,000

Proof of answer

Minus sign indicate Favorable variance.
Budgeted Fixed Overheads $              324,000
Actual Fixed Overheads $              325,880
Budgeted units              3,000,000
Actual units              3,021,000
Overhead rate =( Budgeted Fixed Overheads / Budgeted units)
Applied Fixed Overhead = (Budgeted Fixed Overhead Rate * Actual units)
Budgeted Fixed Overhead Rate (324000/3000000) $                0.1080
Budgeted Fixed Overheads 324000
Less: Applied Fixed Overhead (0.108*3021000) -326268
Fixed Overhead Volume Variance $                (2,268)
Indicate Favorable
Actual Fixed Overheads 325880
Less: Budgeted Fixed Overheads -324000
Fixed Overhead Budget Variance $                  1,880
Indicate Unfavorable
Actual Fixed Overheads 325880
Less: Applied Fixed Overhead (0.108*3021000) -326268
Total Fixed Overhead Variance $                    (388)
Indicate Favorable

ekkarill92 answered 7 months ago
Next > < Previous

Related Solutions

Manlius Company produces a single product. Variable manufacturing overhead is applied to products on the basis...
Manlius Company produces a single product. Variable manufacturing overhead is applied to products on the basis of direct labor hours. The standard costs for one unit of product are as follows: Direct material: 6 ounces at $0.50 per ounce $3.00 Direct labor: 0.6 hours at $30.00 per hour $18.00 Variable manufacturing overhead: 0.6 hours at $10.00 per hour $6.00 Total standard variable cost per unit $27.00 During January, 2,000 units were produced. The costs associated with January’s operations were as...
Manlius Company produces a single product. Variable manufacturing overhead is applied to products on the basis...
Manlius Company produces a single product. Variable manufacturing overhead is applied to products on the basis of direct labor hours. The standard costs for one unit of product are as follows: Direct material: 6 ounces at $0.50 per ounce $3.00 Direct labor: 0.6 hours at $30.00 per hour $18.00 Variable manufacturing overhead: 0.6 hours at $10.00 per hour $6.00 Total standard variable cost per unit $27.00 During January, 2,000 units were produced. The costs associated with January’s operations were as...
Ikerd Company applies manufacturing overhead to jobs on the basis of machine hours used. Overhead costs...
Ikerd Company applies manufacturing overhead to jobs on the basis of machine hours used. Overhead costs are expected to total $300,000 for the year, and machine usage is estimated at 125,000 hours. For the year, $322,000 of overhead costs are incurred and 130,000 hours are used. Collapse question part (a) Compute the manufacturing overhead rate for the year. (Round answer to 2 decimal places, e.g. 1.25.) Manufacturing overhead rate $ per machine hour
Ikea Company applies manufacturing overhead to jobs on the basis of machine hours used. Overhead costs...
Ikea Company applies manufacturing overhead to jobs on the basis of machine hours used. Overhead costs are expected to total $456,789 4 for the year, and machine usage is estimated at 126,000 hours For the year, $432450 of overhead costs are incurred and 125,500 hours are used. What is the predetermined overhead rate What is the amount of overhead applied Has it been over or underapplied? Prepare the adjusting entry to adjust the cost of goods sold
Ikerd Company applies manufacturing overhead to jobs on the basis of machine hours used. Overhead costs...
Ikerd Company applies manufacturing overhead to jobs on the basis of machine hours used. Overhead costs are estimated to total $283,725 for the year, and machine usage is estimated at 126,100 hours. For the year, $303,850 of overhead costs are incurred and 130,200 hours are used. Compute the manufacturing overhead rate for the year. (Round answer to 2 decimal places, e.g. 1.25.) Manufacturing overhead rate $ per machine hour What is the amount of under- or overapplied overhead at December...
If overhead is applied on the basis of machine hours, what will be the overhead rate per hour?
Simplex Company has the following estimated costs for next year: Simplex estimates that 10,000 direct labour and 16,000 machine hours will be worked during the year. If overhead is applied on the basis of machine hours, what will be the overhead rate per hour?
Medusa Products uses a job-order costing system. Overhead costs are applied to jobs on the basis...
Medusa Products uses a job-order costing system. Overhead costs are applied to jobs on the basis of machine-hours. At the beginning of the year, management estimated that the company would work 88,800 machine-hours and incur $346,320 in manufacturing overhead costs for the year.     Required: 1. Compute the company's predetermined overhead rate. (Round your answer to 2 decimal places.) Predetermined overhead rate ............................... Per MH 2. Assume that during the year the company actually worked only 81,900 machine-hours and incurred...
Applied vs. Actual Manufacturing Overhead Davis Manufacturing Corporation applies manufacturing overhead on the basis of 150%...
Applied vs. Actual Manufacturing Overhead Davis Manufacturing Corporation applies manufacturing overhead on the basis of 150% of direct labor cost. An analysis of the related accounts and job order cost sheet indicates that during the year total manufacturing overhead incurred was $787,500 and that at year-end Work in Process Inventory, Finished Goods Inventory, and Cost of Goods Sold included $100,000, $50,000, and $350,000, respectively, of direct labor incurred during the current year. a. Determine the under applied manufacturing overhead at...
Applied vs. Actual Manufacturing Overhead Sloan Manufacturing Corporation applies manufacturing overhead on the basis of 120%...
Applied vs. Actual Manufacturing Overhead Sloan Manufacturing Corporation applies manufacturing overhead on the basis of 120% of direct labor cost. An analysis of the related accounts and job order cost sheet indicates that during the year total manufacturing overhead incurred was $420,000 and that at year-end Work in Process Inventory, Finished Goods Inventory, and Cost of Goods Sold included $60,000, $40,000, and $300,000, respectively, of direct labor incurred during the current year. a. Determine the over-applied manufacturing overhead at year-end...
The Littlefield Company applies manufacturing overhead costs to products on the basis of direct labor-hours. The...
The Littlefield Company applies manufacturing overhead costs to products on the basis of direct labor-hours. The standard cost card shows that 12 direct labor-hours are required per unit of product. For August, the company budgeted to work 360,000 direct labor-hours and to incur the following total manufacturing overhead costs: Total fixed overhead costs $475,200 Total variable overhead costs $396,000 During August, the company completed 28,000 units of product, worked 344,000 direct labor-hours, and incurred the following total manufacturing overhead costs:...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT