The information shown below was taken from the annual manufacturing overhead cos
ID: 2448356 • Letter: T
Question
The information shown below was taken from the annual manufacturing overhead cost budget of Samantha Company.
The information shown below was taken from the annual manufacturing overhead cost budget of Samantha Company. During the year, 4,080 units were produced, 18,700 hours were worked, and the actual manufacturing overhead was $35,140. Actual fixed manufacturing overhead costs equaled budgeted fixed manufacturing overhead costs. Overhead is applied on the basis of direct labor hours. Compute the total, fixed, and variable predetermined manufacturing overhead rates. (Round answers to 2 decimal places, e.g. 1.25.) Compute the total, controllable, and volume overhead variances.Explanation / Answer
predetermined rate = overhead /budgeted hours
Variable overhead = 21840 /8400 =$ 2.60 per direct labor hour
Fixed overhead rate = 11760/8400 =$1.4 per direct labor hour
Total overhead rate = $ 4 per direct labor hour
2)controllable variance = Actual overhead expense - Budgeted allowance for standard hours
= 35140 - [11760 + (4080*2*2.6 )]
= 35140 - [11760 + 21216]
= 35140-32976
= 2164(U)
overhead volume variance= Budgeted allowance for standard hours - (SH*SR)
= 32976 (above) - [(4080*2 ) *4]
= 32976 - 32640
= 336 (U)
Total overhead variance= 2164 +336
= 2500(U)
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