Lackawanna Licorice Company uses a standard cost accounting system and applies p
ID: 2557209 • Letter: L
Question
Lackawanna Licorice Company uses a standard cost accounting system and applies production overhead to products on the basis of machine hours. The following information is available for the year just ended:
Compute the variable-overhead spending variance. (Indicate the effect of each variance by selecting "Favorable" or "Unfavorable". Select "None" and enter "0" for no effect (i.e., zero variance). Do not round intermediate calculation.)
Calculate the company's fixed-overhead volume variance. (Indicate the effect of each variance by selecting "Favorable" or "Unfavorable". Select "None" and enter "0" for no effect (i.e., zero variance).)
Did the company spend more or less than anticipated for fixed overhead?
Company spent more
Company spent less
What was the difference in actual and anticipated overhead?
Was variable overhead underapplied or overapplied during the year? By how much? (Do not round intermediate calculations.)
Lackawanna Licorice Company uses a standard cost accounting system and applies production overhead to products on the basis of machine hours. The following information is available for the year just ended:
Explanation / Answer
Req 1 Planned Activity: 26000 MH Fixed OH rate: $ 13.20 per hour Budgeted Fixed OH: 26000 MH @ 13.20 = $343200 Req 2: Std Variable OH rate per hour: $ 7.90 per hour Actual Hours: 26700 MH Actual variable OH: $202,920 Vvariable OH spending = Actul MH worked*Std OH rate - Actual Varriable OH 26700*7.90 - 202,920 = 8010 F Req 3: Std Fixed OH for actuall output: 15700*2 hours @ 13.20 = $ 414,480 Budgeted Fixed OH: $ 343200 Fixed OH Volume variancec= Std Fixed OH - Budgeted Oh 414480-343200 = 71280 F Req 4-a Budgeted Fixed OH: 343200 Actual fixed OH: 355110 Company spent more than anticipated. Req 4-b: Fixed OH Budget Variance= Budgeted OH -Actual OH 343200-355110 = 11910 U Q5. Variable OH actual incurred 202920 Add: Variable OH applied 210930 (26700 MH @7..90) Over-applied 8010
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