Question
In: Accounting
Brookster Inc. used a standard costing system for its production process. Fixed overhead is allocated based...
Brookster Inc. used a standard costing system for its production process. Fixed overhead is allocated based on machine hours. Budgeted fixed overhead for the month was $16,910 for budgeted capacity of 8,900 machine hours. Actual fixed overhead was $17,500 for 1,800 units of output. The standard time allowed was 5 machine hours per unit of output.
Required:
(a) Compute SQ in total:
(b) Compute the Standard Price for fixed overhead:
(c) Compute the Fixed Overhead Spending Variance and Fixed Overhead Production-Volume Variance. Be sure to label your variances as favorable (F) or unfavorable (U).
(d) Is overhead under or over allocated? By how much?
Solutions
Expert Solution
(a) Compute SQ in total:
SQ is the standard quantity of input allowed for actual output = 9,000 hours
| Total budgeted machine hours | = | 8,900 | hours (a) |
| Machine hours per unit of output | = | 5 | hours (b) |
| Total output based on budgeted machine hours available | = | 1,780 | units (c=a/b) |
| Actual output | = | 1,800 | units (d) |
| Standard quantity (SQ) | = | 9,000 | hours (e=d*b) |
(b) Compute the Standard Price for fixed overhead: $ 9.51
| Total budgeted machine hours | = | 8,900 | hours (a) |
| Machine hours per unit of output | = | 5 | hours (b) |
| Total output based on budgeted machine hours available | = | 1,780 | units (c=a/b) |
| Actual output | = | 1,800 | units (d) |
| Standard quantity | = | 9,000 | hours (e=d*b) |
| Budgeted fixed overhead | = | $16,910 | (f) |
| Standard price of fixed overhead | = | $9.50 | (g = f/c) |
(c) Compute the Fixed Overhead Spending Variance and Fixed Overhead Production-Volume Variance. Be sure to label your variances as favorable (F) or unfavorable (U).
| Fixed Overhead Spending Variance | = | $590 (U) | Unfavourable |
| Fixed Overhead Production-Volume Variance | = | $190 (F) | Favourable |
| Total budgeted machine hours | = | 8,900 | hours (a) |
| Machine hours per unit of output | = | 5 | hours (b) |
| Total output based on budgeted machine hours available | = | 1,780 | units (c=a/b) |
| Actual output | = | 1,800 | units (d) |
| Standard quantity | = | 9,000 | hours (e=d*b) |
| Budgeted fixed overhead | = | $16,910 | (f) |
| Standard price of fixed overhead | = | $9.50 | (g = f/c) |
| Actual Quantity at Actual Price | = | $17,500 | (h) |
| Actual Quantity at Standard Price | = | $17,100 | (i=d*g) |
| Fixed Overhead Spending Variance | = | $590 | (j=h-f) |
| Fixed Overhead Production-Volume Variance | = | $190 | (k=i-f) |
(d) Is overhead under or over allocated? By how much?
Overhead is overallocated by $190
ekkarill92 answered 1 year agoRelated Solutions
Q 18 Rice Processors Plc uses a standard costing system. Fixed production overhead is absorbed on...
Q 18
Rice Processors Plc uses a standard costing system. Fixed
production overhead is absorbed on the basis of direct labour
hours. The following data relate to a particular period of
operation
Standard price of
material/kg
GHS5.90
Actual material issued to
production
4,110kg
Standard labour
hours
1,680
Actual direct labour
hours
1,760
Actual fixed
overhead
GHS5,620
The following variance were calculated at the end of the
period
GHS
Direct material
cost
702(A)
Direct material
usage
531(F)
Direct labour
efficiency ...
Akyede Groups of Companies uses a standard cost system for its production process and applies overhead...
Akyede Groups of Companies uses a standard cost system for its
production process and applies overhead based on direct labour
hours. The following information is available for May when Akyede
produced 4,500 units: Standard: Direct labour hour per unit - 2.50,
Variable overhead per direct labour hour - GH¢1.75, the fixed
overhead per direct labour hour - GH¢3.10, Budgeted variable
overhead - GH¢21,875, Budgeted fixed overhead - GH¢38,750. Actual:
Direct labour hours - 10,000, Variable overhead- GH¢26,250, Fixed
overhead- GH¢38,000....
Overhead Variances, Four-Variance Analysis Oerstman, Inc., uses a standard costing system and develops its overhead rates...
Overhead Variances, Four-Variance Analysis Oerstman, Inc., uses
a standard costing system and develops its overhead rates from the
current annual budget. The budget is based on an expected annual
output of 124,000 units requiring 496,000 direct labor hours.
(Practical capacity is 516,000 hours.) Annual budgeted overhead
costs total $818,400, of which $585,280 is fixed overhead. A total
of 119,400 units using 494,000 direct labor hours were produced
during the year. Actual variable overhead costs for the year were
$260,600, and...
Overhead Variances, Four-Variance Analysis Oerstman, Inc., uses a standard costing system and develops its overhead rates...
Overhead Variances, Four-Variance Analysis
Oerstman, Inc., uses a standard costing system and develops its
overhead rates from the current annual budget. The budget is based
on an expected annual output of 123,000 units requiring 492,000
direct labor hours. (Practical capacity is 512,000 hours.) Annual
budgeted overhead costs total $816,720, of which $585,480 is fixed
overhead. A total of 119,500 units using 490,000 direct labor hours
were produced during the year. Actual variable overhead costs for
the year were $261,100, and...
Overhead Variances, Four-Variance Analysis Oerstman, Inc., uses a standard costing system and develops its overhead rates...
Overhead Variances, Four-Variance Analysis
Oerstman, Inc., uses a standard costing system and develops its
overhead rates from the current annual budget. The budget is based
on an expected annual output of 125,000 units requiring 500,000
direct labor hours. (Practical capacity is 520,000 hours.) Annual
budgeted overhead costs total $830,000, of which $585,000 is fixed
overhead. A total of 119,300 units using 498,000 direct labor hours
were produced during the year. Actual variable overhead costs for
the year were $260,000, and...
Overhead Variances, Four-Variance Analysis Oerstman, Inc., uses a standard costing system and develops its overhead rates...
Overhead Variances, Four-Variance Analysis
Oerstman, Inc., uses a standard costing system and develops its
overhead rates from the current annual budget. The budget is based
on an expected annual output of 130,000 units requiring 520,000
direct labor hours. (Practical capacity is 540,000 hours.) Annual
budgeted overhead costs total $842,400, of which $608,400 is fixed
overhead. A total of 119,000 units using 518,000 direct labor hours
were produced during the year. Actual variable overhead costs for
the year were $261,900, and...
Overhead Variances, Four-Variance Analysis Oerstman, Inc., uses a standard costing system and develops its overhead rates...
Overhead Variances, Four-Variance Analysis
Oerstman, Inc., uses a standard costing system and develops its
overhead rates from the current annual budget. The budget is based
on an expected annual output of 123,000 units requiring 492,000
direct labor hours. (Practical capacity is 512,000 hours.) Annual
budgeted overhead costs total $811,800, of which $580,560 is fixed
overhead. A total of 119,200 units using 490,000 direct labor hours
were produced during the year. Actual variable overhead costs for
the year were $260,100, and...
Overhead Variances, Four-Variance Analysis Oerstman, Inc., uses a standard costing system and develops its overhead rates...
Overhead Variances, Four-Variance Analysis Oerstman, Inc., uses
a standard costing system and develops its overhead rates from the
current annual budget. The budget is based on an expected annual
output of 129,000 units requiring 516,000 direct labor hours.
(Practical capacity is 536,000 hours.) Annual budgeted overhead
costs total $861,720, of which $608,880 is fixed overhead. A total
of 119,300 units using 514,000 direct labor hours were produced
during the year. Actual variable overhead costs for the year were
$261,800, and...
Overhead Variances, Four-Variance Analysis Oerstman, Inc., uses a standard costing system and develops its overhead rates...
Overhead Variances, Four-Variance Analysis Oerstman, Inc., uses
a standard costing system and develops its overhead rates from the
current annual budget. The budget is based on an expected annual
output of 129,000 units requiring 516,000 direct labor hours.
(Practical capacity is 536,000 hours.) Annual budgeted overhead
costs total $861,720, of which $608,880 is fixed overhead. A total
of 119,300 units using 514,000 direct labor hours were produced
during the year. Actual variable overhead costs for the year were
$261,800, and...
Overhead Variances, Four-Variance Analysis Oerstman, Inc., uses a standard costing system and develops its overhead rates...
Overhead Variances,
Four-Variance Analysis
Oerstman, Inc., uses a
standard costing system and develops its overhead rates from the
current annual budget. The budget is based on an expected annual
output of 126,000 units requiring 504,000 direct labor hours.
(Practical capacity is 524,000 hours.) Annual budgeted overhead
costs total $821,520, of which $594,720 is fixed overhead. A total
of 119,300 units using 502,000 direct labor hours were produced
during the year. Actual variable overhead costs for the year were
$260,300, and...
ADVERTISEMENT
ADVERTISEMENT
Latest Questions
- Consider a specific job within the criminal justice system. What characteristics of that job are sources...
- Asiacentric Communication Ethics and Competence Asia is diverse and dynamic. It is a region of cultural...
- Three Steps to Cross-Cultural Dialogue With “a global mindset by which we try to see things...
- 10.21 How do ratings of TV and phone services compare? File Telecom contains a rating of...
- The sun is 150,000,000 km from earth; its diameter is 1,400,000 km.For a science project on...
- Redesigned Computers has 10 percent coupon bonds outstanding with a current market price of $898.06. The...
- Each part of this question covers a key concept. Each requires at most a few sentences...
ADVERTISEMENT