You brought your work home one evening, and your nephew spilled his chocolate mi
ID: 2511440 • Letter: Y
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).) 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 outpu 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 5 hours S 9.00 S 27,500 11,000 S 33,000 Unfavorable S 126,000 Favorable S 9,000 Unfavorable S 366,500 S 446,500Explanation / Answer
Solution:-
Explanation 1 Actual fixed overhead:-
Fixed overhead budget variance = actual fixed overhead – budgeted fixed overhead
$9,000 U = actual fixed overhead - $27,500
actual fixed overhead = $9,000 + $27,500 = $36,500
Explanation 2 Actual variable overhead rate/machine hour:-
Need to determine the actual variable overhead and actual hours
Actual variable overhead = Total actual overhead – Actual fixed overhead
Actual variable overhead = $366,500 - $36,500 (from Explanation 1) = $330,000
Variable overhead spending variance = actual variable overhead – (actual hours x standard rate)
$33,000 U = $330,000 – (actual hours x $8)
$8 * actual hours = $330,000 - $33,000
Actual hours = 37,125
Actual variable overhead rate/machine hour = Actual variable overhead ÷ Actual hours
$330,000 / 37,125 = $8.89 per hour
Explanation 3 Actual production in units:-
Actual production in units = Total standard hours ÷ Standard hours/unit
Standard hours/unit is given = 5 hours
Fixed overhead rate = Budgeted fixed overhead ÷ Budgeted machine hours
= $27,500 ÷ (11,000 units x 5 hours/unit)
= $ 0.50 / hour
Total standard overhead rate = Standard variable overhead rate + Fixed overhead rate
= $9.00 + $0.50
= $ 9.50
Total applied overhead = Total standard hours x Total standard overhead rate
$446,500 = Total standard hours x $9.50
Total standard hours = $446,500 ÷ $9.50
= 47,000 hours
Actual production in units = 47,000 hours ÷ 5 hours/unit
= 9,400 units
Explanation 4 Actual machine hours/unit of output:-
Actual machine hours/unit of output = Total actual machine hours ÷ Actual production
Total actual machine hours was computed in Explanation 2 = 37,125 hours
Actual production was computed in Explanation 3 = 9,400 units
Actual machine hours/unit of output = 37,125 hours ÷ 9,400 units
= 3.95 hours/unit
Explanation 5 Total budgeted overhead (flexible budget):-
Total budgeted overhead (flexible budget) = Budgeted fixed overhead (Standard variable rate x Standard hours)
Budgeted fixed overhead given = $27,500
Standard variable rate given = $9/machine hour
Standard hours = 5 hours x 9,400 units (from Explanation 3) = 47,000 hours
Total budgeted overhead (flexible budget) = $27,500 + ($9.00 x 47,000 hours)
= $450,500
Explanation 6 Total budgeted overhead (static budget):-
Total budgeted overhead (static budget) = Total standard overhead rate x Budgeted production x Standard hours/unit
Total standard overhead rate (computed in Explanation 3) = $9.50
Budgeted production given = 11,000
Standard hours/unit given = 5
Total budgeted overhead (static budget) = $9.50 x 11,000 units x 5 hours/unit
= $522,500
Explanation 7 Fixed overhead volume variance:-
Fixed overhead volume variance = Budgeted fixed overhead – Applied fixed overhead
Budgeted fixed overhead given = $27,500
Applied fixed overhead = Fixed overhead rate (computed in Explanation 3) x Actual production (computed in Explanation 3) x Standard machine hours/unit
Applied fixed overhead = $0.50 x (9,400 x 5) = $23,500
Fixed overhead volume variance = $27,500 ? $23,500 = $4,000 F
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Explanation Standard machine hours per unit of output 5 Hours Standard variable overhead rate per machine hour $ 9.00 Actual variable overhead rate per machine hour $ 8.89 2 Actual machine hours per unit of output 3.95 4 Budgeted fixed overhead $ 27,500 Actual fixed overhead $ 36,500 1 Budgeted production in units 11,000 Actual production in units 9,400 3 Variable overhead spending variance $ 33,000 Unfavorable Variable overhead efficiency variance $ 126,000 Favorable Fixed overhead budget variance $ 9,000 Favorable Fixed overhead volume variance $ 4,000 Favorable 7 Total actual overhead $ 366,500 Total budgeted overhead (flexible budget) $ 450,500 5 Total budgeted overhead (static budget) $ 522,500 6 Total applied overhead $ 446,500Related Questions
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