Question
In: Accounting
The information shown below was taken from the annual manufacturing overhead cost budget of Culver Company....
The information shown below was taken from the annual
manufacturing overhead cost budget of Culver Company.
| Variable manufacturing overhead costs | $27,720 | |
| Fixed manufacturing overhead costs | $12,600 | |
| Normal production level in labor hours | 12,600 | |
| Normal production level in units | 4,200 | |
| Standard labor hours per unit | 3 |
During the year, 4,100 units were produced, 19,000 hours were
worked, and the actual manufacturing overhead was $40,760. Actual
fixed manufacturing overhead costs equaled budgeted fixed
manufacturing overhead costs. Overhead is applied on the basis of
direct labor hours.
Compute the total, fixed, and variable predetermined
manufacturing overhead rates. (Round answers to 2
decimal places, e.g. 1.25.)
|
Item |
Rate |
|
| Variable overhead | $ | |
| Fixed overhead | ||
| Total overhead | $ |
Compute the total, controllable, and volume overhead
variances.
| Total overhead variance | $ | Unfavorable, Neither favorable nor unfavorable, Favorable | ||
| Overhead controllable variance | $ | Neither favorable nor unfavorable, Favorable, Unfavorable | ||
| Overhead volume variance | $ | Unfavorable, Neither favorable nor unfavorable, Favorable |
Solutions
Expert Solution
| Answer: |
|
Predetermined Variable overhead
rate = Variable manufacturing overhead costs / No. of labor Hours = $ 27,720 / 12,600 = $ 2.20 per labor hour |
| Variable overhead rate = $ 2.20 per labor hour |
|
Predetermined Fixed overhead
rate = Fixed manufacturing overhead costs / No. of labor Hours = $ 12,600 / 12,600 = $ 1 per labor hour |
| Fixed overhead rate = $ 1 per labor hour |
|
Total overhead = ( $
27,720 + $ 12,600 ) / 12,600 = $ 3.20 per labor hour |
| Total overhead = $ 3.20 |
| 2) |
|
Total overhead variance = Actual overhead (-) Absorbed Overhead = $ 40,760 (-) ( 4,100 Units x 3 x $ 3.20 ) = $ 40,760 (-) $ 39,360 = $ 1,400 (unfavourable ) |
| Total overhead variance = $ 1,400 (unfavourable ) |
|
Overhead controllable variance = Budgeted overhead (-) Actual overhead = ( 4,100 units x 3 x $ 2.20 ) + $ 12,600 ) (-) $ 40,760 = $ 39,660 (-) $ 40,760 = $ 1,100 (unfavourable ) |
| Overhead controllable variance = $ 1,100 (unfavourable ) |
| 3) |
|
Overhead volume variance = Applied Fixed overhead (-) Budgeted fixed overhead = ( 4,100 Units x 3 x $ 1 ) (-) $ 12,600 = $ 12,300 (-) $ 12,600 = $ 300 (unfavourable ) |
| Overhead volume variance = $ 300 (unfavourable ) |
ekkarill92 answered 1 year agoRelated Solutions
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Variable overhead cost:
Indirect factory labor
$122,200
Power and light
4,160
Indirect materials
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1)
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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 18,000 hours of
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overhead cost budget for the Press Department for October of the
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