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 "O" for no effect (i.e., zero variance).) 3 hours Standard machine hours per unit of output Standard variable-overhead rate per machiehour10.00 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 $ 30,450 14.500 $32,000 Unfavorable $100,000 Favorable $8,500 Unfavorable $ 390,950 S 449,400

Explanation / Answer

Requirement Actual fixed overhead Budgeted Fixed Overhead 30450 Add : Fixed Overhead Budget variance 8500 Unfavourable Actual fixed Overhead 38950 Total Actual variable overhead Total actual overhead 390950 Less : Total actual fixed overhead 38950 Actual Variable overhead 352000 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 = =30450+14500*10*3 = 465450 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)) = =449400/((3*10)+(30450/14500)) = 14000 Requirement Total Budgted overhead(flexible budget) = Total variable overhead(Flexible budget)+Total budgeted fixed overhead = =14000*30+30450 =14000*30+30450 = 450450 =14000*30+30450 Requirement Fixed overhead volume variance = Applied fixed overhead-Budgted fixed overhead = =14000*2.1-30450 = -1050 Unfavourable Actual Variable overhead 352000 Less :Unfavourable variable overhead spending variance -32000 Variable Overhead at standard rate 320000 Standard rate per unit of variable overhead 30 Variable standard output 10666.6667 Standard machine hour per unit of output 3 Actual machine hours to produce 14000 units of output 32000 Requirement Actual Overhead rate per machine hour 11 =(Actual variable overhead/Actual machine hours to produce 14000 units) Requirement Actual machine hours per unit of output =32000/14000 = 2.286

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