Item Rate LINK TO TEXT The information shown below was taken from the annual man
ID: 2476003 • Letter: I
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The information shown below was taken from the annual manufacturing overhead cost budget of Samantha Company.Variable manufacturing overhead costs $65,600 Fixed manufacturing overhead costs $41,000 Normal production level in labor hours 20,500 Normal production level in units 4,100 Standard labor hours per unit 5
During the year, 4,000 units were produced, 18,800 hours were worked, and the actual manufacturing overhead was $106,000. Actual fixed manufacturing overhead costs equaled budgeted fixed manufacturing overhead costs. Overhead is applied on the basis of direct labor hours.
Explanation / Answer
Compute the total, fixed, and variable predetermined manufacturing overhead rates
Variable overhead = 65,600
Fixed overhead = 41,000
Total = (65600+41000)/Machine hors = 106,600/20,500 =$5.20
Compute the total, controllable, and volume overhead variances.
Total overhead variance = Actual Overhead - Overhead Applied
= 106,000-(4,000*5*5.2) = $2,000
Total Overhead controllable variance = Actual Overhead - Overhead Budgeted
= 106,000-105,000= $1,000 U
Overhead budgeted = 65,600/20,500 = $3.20*20,000* +41,000 = $105,000
*20,000 =(4,000*5)
Total Overhead volume variance rate = Fixed Overhead x ( Normal Capacity Hours - Standard Hours Allowed)
2*(20,500-(4,000*5))= $1,000U
*(41,000/20,5000=2)
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