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. (Hint: It is helpful to solve for the unknowns in the order indicated by the letters in the following table.) (Indicate the effect of each variance by selecting "Favorable" or "Unfavorable". Select "None" and enter "0" for no effect (i.e., zero variance). Round all overhead rates and "Actual machine hours" to 2 decimal places. Round all other calculations to the nearest whole number or dollar.)

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. (Hint: It is helpful to solve for the unknowns in the order indicated by the letters in the following table.) (Indicate the effect of each variance by selecting "Favorable" or "Unfavorable". Select "None" and enter "0" for no effect (i.e., zero variance). Round all overhead rates and "Actual machine hours" to 2 decimal places. Round all other calculations to the nearest whole number or dollar.)

Explanation / Answer

a. Fixed overhead budget variance = Budgeted Fixed overhead - Actual fixed overhead

(-)16500 = 55500 - Actual fixed overhead

  Actual fixed overhead = 55500 + 16500 = $ 72000

Variable- Overhead Spending variance = (Actual hours * Standard variable overhead rate per hour) - Actual Variable Overhead

(-) 52800 = (Actual hours * 11) - 580800 (Note 1)

528000 = Actual hours * 11

Actual hours = 528000 /11 = 48000

(Note 1) Total actual overhead = Total actual fixed overhead + Total actual variable overhead

652800 = 72000 + Total actual variable overhead

  Total actual variable overhead = 652800 - 72000= $ 580800

Variable overhead variance = Variable overhead spending variance + Variable overhead efficiency variance

= (-) 52800 + 154000

= $ 101200

  Variable overhead variance = (Standard hours for actual output* Standard variable overhead rate) - Actual Variable overhead

101200 = ( Y * 11) - 580800

Standard hours for actual output (Y) = 479600 / 11 = 43600

Variable Overhead efficiency variance = (Standard hours for actual output * Standard variable overhead rate per hour) - (Actual hours worked * standard variable overhead rate per hour)

154000 = ( 43600 * 11) - (Actual hours worked * 11)

Actual hours worked = (479600 - 154000) / 11 = 29600

Variable- Overhead Spending variance = Actual hours ( Standard variable overhead rate per hour - Actual variable overhead rate per hour)

(-) 52800 = 29600 (11 - Actual variable overhead rate per hour)

b.) Actual Variable-Overhead rate per machine hour =$ 12.784 (approx)

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