Sucher Company uses a standard cost system in which manufacturing overhead costs

Question

Sucher Company uses a standard cost system in which manufacturing overhead costs are applied to units of product on the basis of standard machine-hours. The company's standards are based on variable manufacturing overhead of $3.2 per machine-hour and fixed manufacturing overhead of $306,800 per year. The denominator level of activity is 29,500 machine-hours. Standards call for 2.2 machine-hours per unit of output. Actual activity and manufacturing overhead costs for the year are given below:

What was the variable overhead rate variance? (Input the amount as positive value. Indicate the effect of variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance).Leave no cell blank - be certain to enter "0" wherever required. Omit the "$" sign in your response.)

What was the variable overhead efficiency variance? (Input the amount as positive value.Indicate the effect of variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Leave no cell blank - be certain to enter "0" wherever required. Omit the "$" sign in your response.)

What was the fixed manufacturing overhead budget variance? (Input the amount as positive value.Indicate the effect of variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Leave no cell blank - be certain to enter "0" wherever required. Omit the "$" sign in your response.)

What was the fixed manufacturing overhead volume variance? (Input the amount as positive value.Indicate the effect of variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Leave no cell blank - be certain to enter "0" wherever required. Omit the "$" sign in your response.)

Sucher Company uses a standard cost system in which manufacturing overhead costs are applied to units of product on the basis of standard machine-hours. The company's standards are based on variable manufacturing overhead of $3.2 per machine-hour and fixed manufacturing overhead of $306,800 per year. The denominator level of activity is 29,500 machine-hours. Standards call for 2.2 machine-hours per unit of output. Actual activity and manufacturing overhead costs for the year are given below:

Explanation / Answer

Sucher Company uses a standard cost system in which manufacturing overhead costs are applied to units of product on the basis of standard machine-hours. The company's standards are based on variable manufacturing overhead of $3.2 per machine-hour and fixed manufacturing overhead of $306,800 per year. The denominator level of activity is 29,500 machine-hours. Standards call for 2.2 machine-hours per unit of output. Actual activity and manufacturing overhead costs for the year are given below:

standard hours allowed for the output = 12300*2.2 = 27060

What was the variable overhead rate variance? (Input the amount as positive value. Indicate the effect of variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance).Leave no cell blank - be certain to enter "0" wherever required. Omit the "$" sign in your response.)

variable overhead rate variance = (SR*Actual Machine-hours used - Actual Variable Overhead costs)

variable overhead rate variance = (3.2*26750 - 86870)

variable overhead rate variance = $ 1270 Unfavorable

What was the variable overhead efficiency variance? (Input the amount as positive value.Indicate the effect of variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Leave no cell blank - be certain to enter "0" wherever required. Omit the "$" sign in your response.)

variable overhead efficiency variance = (SR*Standard Machine-hours to be used - SR*Actual Machine-hours used)

variable overhead efficiency variance = (3.2*27060 - 3.2*26750)

variable overhead efficiency variance = $ 992 Favorable

What was the fixed manufacturing overhead budget variance? (Input the amount as positive value.Indicate the effect of variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Leave no cell blank - be certain to enter "0" wherever required. Omit the "$" sign in your response.)

Budget variance = 306800-304800 = 2000 F

What was the fixed manufacturing overhead volume variance? (Input the amount as positive value.Indicate the effect of variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Leave no cell blank - be certain to enter "0" wherever required. Omit the "$" sign in your response.)

Volume variance = 306800/29500*27060 - 306800 = 25376 U

  Units produced 12,300 units   Machine-hours used 26,750 machine-hours   Overhead costs incurred:      Variable costs $ 86,870      Fixed costs $ 304,800

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