You brought your work home one evening, and your nephew spilled his chocolate mi

Question

You brought your work home one evening, and your nephew spilled his chocolate milk shake on the variance report you were preparing. Fortunately, knowing that overhead was applied based on machine hours, you were able to reconstruct the obliterated information from the remaining data. Fill in the missing numbers below. (Round your answer to two decimal places. Indicate the effect of each variance by selecting "Favorable" or "Unfavorable". Select "None" and enter "0" for no effect (i.e., zero variance).) 4 hours Standard machine hours per unit of output Standard variable-overhead rate per machine hour Actual variable-overhead rate per machine hour Actual machine hours per unit of output Budgeted fixed overhead Actual fixed overhead Budgeted production in units Actual production in units Variable-overhead spending variance Variable-overhead efficiency variance Fixed-overhead budget variance Fixed-overhead volume variance Total actual overhead Total budgeted overhead (flexible budget) Total budgeted overhead (static budget) Total applied overhead 11.00 $ 44,800 14,000 $ 19,500 Unfavorable $154,000 Favorable $12,000 Unfavorable $ 505,300 $ 625,400

Explanation / Answer

Requirement Actual fixed overhead Budgeted Fixed Overhead 44800 Add : Fixed Overhead Budget variance 12000 Unfavourable Actual fixed Overhead 56800 Total Actual variable overhead Total actual overhead 505300 Less : Total actual fixed overhead 56800 Actual Variable overhead 448500 Requirement Total Budgted overhead(Static Budget) = Budgeted fixed Overhead+(Budgeted production in units*Standard machine hours per unit of output*standard variable overhead rate per machine hour = 44800+14000*4*11 = 660800 Requirement Actual production in units = Total applied overhead/((Standard machine hours per unit of output*standard variable overhead rate per machine hour)+(Budgted fixed overhead/budgted production in units)) = 625400/((4*11)+(44800/14000)) = 13250 Requirement Total Budgted overhead(flexible budget) = Total variable overhead(Flexible budget)+Total budgeted fixed overhead = 13250*44+44800 = 627800 Requirement Fixed overhead volume variance = Applied fixed overhead-Budgted fixed overhead = 13250*3.2-44800 = -2400 Unfavourable Actual Variable overhead 448500 Actual variable overhead Less :Unfavourable variable overhead spending variance -19500 Variable Overhead at standard rate 429000 Standard rate per unit of variable overhead 44 9750 Standard machine hour per unit of output 4 Actual machine hours to produce 13250 units of output 39000 Requirement Actual Overhead rate per machine hour 11.5 =(Actual variable overhead/Actual machine hours to produce 13250 units) Requirement Actual machine hours per unit of output =39000/13250 = 2.94

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