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 )

Related Solutions

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 18,000 hours of productive capacity in the department: Variable overhead cost:    Indirect factory labor $165,600    Power and light 5,760    Indirect materials 46,800       Total variable overhead cost $218,160 Fixed overhead cost:    Supervisory salaries $76,360    Depreciation of plant and equipment 48,000    Insurance and property taxes 30,540       Total fixed overhead cost 154,900 Total factory...
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 9,000 hours of productive capacity in the department: Variable overhead cost:    Indirect factory labor $76,500    Power and light 2,790    Indirect materials 21,600       Total variable overhead cost $100,890 Fixed overhead cost:    Supervisory salaries $35,310    Depreciation of plant and equipment 22,200    Insurance and property taxes 14,120       Total fixed overhead cost 71,630 Total factory...
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 14,000 hours of productive capacity in the department: Variable overhead cost:    Indirect factory labor $133,000    Power and light 6,440    Indirect materials 30,800       Total variable overhead cost $170,240 Fixed overhead cost:    Supervisory salaries $59,580    Depreciation of plant and equipment 37,450    Insurance and property taxes 23,830       Total fixed overhead cost 120,860 Total factory...
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 13,000 hours of productive capacity in the department: Variable overhead cost:    Indirect factory labor $122,200    Power and light 4,160    Indirect materials 35,100       Total variable overhead cost $161,460 Fixed overhead cost:    Supervisory salaries $56,510    Depreciation of plant and equipment 35,520    Insurance and property taxes 22,600       Total fixed overhead cost 114,630 Total factory...
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 15,000 hours of productive capacity in the department: Variable overhead costs:    Indirect factory labor $118,500    Power and light 6,900    Indirect materials 42,000       Total variable overhead cost $167,400 Fixed overhead costs:    Supervisory salaries $58,590    Depreciation of plant and equipment 36,830    Insurance and property taxes 23,440       Total fixed overhead cost 118,860 Total factory...
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 20,000 hours of productive capacity in the department: Variable overhead costs:    Indirect factory labor $180,000    Power and light 12,000    Indirect materials 64,000       Total variable overhead cost $256,000 Fixed overhead costs:    Supervisory salaries $ 80,000    Depreciation of plant and equipment 50,000    Insurance and property taxes 32,000       Total fixed overhead cost 162,000 Total...
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 10,000 hours of productive capacity in the department: Variable overhead cost:    Indirect factory labor $87,000    Power and light 4,400    Indirect materials 31,000       Total variable overhead cost $122,400 Fixed overhead cost:    Supervisory salaries $42,840    Depreciation of plant and equipment 26,930    Insurance and property taxes 17,140       Total fixed overhead cost 86,910 Total factory...
1)   Flexible Overhead Budget Leno Manufacturing Company prepared the following factory overhead cost budget for the...
1)   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 18,000 hours of productive capacity in the department: Variable overhead cost:    Indirect factory labor $158,400    Power and light 6,120    Indirect materials 46,800       Total variable overhead cost $211,320 Fixed overhead cost:    Supervisory salaries $73,960    Depreciation of plant and equipment 46,490    Insurance and property taxes 29,580       Total fixed overhead cost 150,030 Total...
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 9,000 hours of productive capacity in the department: Variable overhead costs:    Indirect factory labor $87,300    Power and light 3,780    Indirect materials 27,000       Total variable overhead cost $118,080 Fixed overhead costs:    Supervisory salaries $41,330    Depreciation of plant and equipment 25,980    Insurance and property taxes 16,530       Total fixed overhead cost 83,840 Total factory...
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 10,000 hours of productive capacity in the department: Variable overhead cost:    Indirect factory labor $86,000    Power and light 4,100    Indirect materials 31,000       Total variable overhead cost $121,100 Fixed overhead cost:    Supervisory salaries $42,390    Depreciation of plant and equipment 26,640    Insurance and property taxes 16,950       Total fixed overhead cost 85,980 Total factory...
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT