spending and efficiency variances for variable overhead and the budget variance

Question

spending and efficiency variances for variable overhead and the budget variance for fixed overhead. Use Exhibit 10-13 as a guide in preparing the performance report. EXERCISE 10-17 Capacity Analysis [LO7 Comfort Company produces leather office chairs. The standard cost per chair is as follows: $35 2 Overhead rates are based on a denominator actvity level of 3000 machine-hours During 2015, Comfort Company produced and sold 12000 office chairs. Management believes that the denominator level of activity represents 75% of theoretical capacity and 80% of practical capacity Required: 1. Calculate the total overhead costs at the following levels of activity: theoretical, practical, denominator, and actual (2015). 2. Assuming Comfort Company can sell all of the chairs it can produce for $100 per unit, calculate the opportunity loss of producing 12,000 chairs in 2015 compared to the following capacity utilization alternatives: theoretical, practical, and denominator. PROBLEMS aconnect PROBLEM 10-18 Comprehensive Variance Analysis [LO2, LO3, LO4

Explanation / Answer

Please hit LIKE button if this helped. For any further explanation, please put your query in comment, will get back to you. Units Per Unit Hours Total Hours Actual Units Produced 12000 2 24000 Theoritical Capacity 16000 2 32000 (32000/2) (24000/75%) Practical Capacity 15000 2 30000 (30000/2) (24000/80%) Part-1 Theoritical Practical Actual Denominator Hours Needed 30000 32000 24000 30000 Units 15000 16000 12000 15000 Variable Overhead Hours*4 120000 128000 96000 120000 Fixed Overhead 240000 240000 240000 240000 (16*15000) Total Overhead Cost 360000 368000 336000 360000 Part-2 Theoritical Practical Actual Denominator Units 15000 16000 12000 15000 Sale Value Unit*100 1500000 1600000 1200000 1500000 Less: Direct Material Unit*35 525000 560000 420000 525000 Less: Direct Labor Unit*15 225000 240000 180000 225000 Less: Variable Overhead 120000 128000 96000 120000 Less: Fixed Overhead 240000 240000 240000 240000 Net Profit 390000 432000 264000 390000 Loss of opportunity 126000 168000 126000 (Profit-264000)

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