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Rand Company: Units actually produced 76,000 Actual Direct Labor Hours worked 16

ID: 2484443 • Letter: R

Question

Rand Company: Units actually produced 76,000 Actual Direct Labor Hours worked 160,000 Actual variable overhead incurred $500,000 Actual fixed overhead incurred 384,000 Based on monthly normal volume of 100,000 units (200,000 direct labor hours), Rands standars cost system contained the following overhead costs: Varuable $6 per unit Fixed 4 per unit

The fixed overhead budget was?

A. 8,000 U

B. 8,000 F

C. 16,000 U

D. 16,0000 F

The unfavorable varianble overhead spending variance was

A. 12,000

B.20,000

C. 24,000

D 44,000

The fixed overhead volume variance was

A. 96,000 U

B. 96,000 F

C. 80,000 U

D. 80,000 F

Explanation / Answer

1

The fixed overhead budget was= 16000 u

Working notes for the above answer is as under

2

The unfavorable varianble overhead spending variance was

Answer:20,000

Working notes for the above answer is as under

  Variable Overhead Spending Variance

Actual hours worked x (Actual overhead rate - standard overhead rate)
= Variable overhead spending variance

=160,000 * (3.125 -3)

=160000*0.875

=20,000

* Standered Variable overhead rate is $ 6 per units

=per units required 2 direct labour hour so per hour hour direct labour hour is =6/2

=$ 3 per hour

3

The fixed overhead volume variance was

Answer: $ 96000 F

Working notes for the above answer is under

Fixed Overhead Volume Variance = Applied Fixed Overhead – Budgeted Fixed Overhead

Budgeted fixed OH

=2*200,000

=400,000

Fixed Overhead Volume Variance = Applied Fixed Overhead – Budgeted Fixed Overhead

                                     =76000*4-400,000

=304000-400,00

=96000 F

Fixed Over head rate 4 per units Monthly normal vaolume 100,000 units Direct labour hours monthly 200,000 Total fixed cost standered
=200,000*4 400000 Actual fixed overhead incurred 384000 fixed overhead budget was
=400,000-384000 16000 16000 u