Overhead information for Cran-Mar Company for October follows: 1. What is the st
ID: 467438 • Letter: O
Question
Overhead information for Cran-Mar Company for October follows:
1. What is the standard fixed factory overhead rate per machine-hour? (Round to 2 decimal places.)
2. What is the denominator activity level that was used to establish the fixed overhead application rate? (Round to nearest whole number.)
3. Calculate the following overhead variances for October:
a. Total flexible-budget variance for factory overhead.
b. Fixed overhead production volume variance.
c. Total factory overhead cost variance.
Example:
Total overhead incurred $ 32,000 Budgeted fixed overhead $ 7,385 Total standard overhead rate per machine-hour (MH) $ 4.90 Standard variable overhead rate per MH $ 3.20 Standard MHs allowed for the units manufactured 4,100Explanation / Answer
1- Standard Fixed factory overhead rate per machine hour=4.9-3.2=1.7
2-Denominator Activitylevel for fixed overhead application rate=budgeted fixed overhead rate/standard fixed factoru OH rate per mahine hr= 7385/1.7=4344.118
3-
a) Total Flexible budget = Variable Overhead+ fixed Overhead=3.2*4100+7385=20505
Total Actual Overhead=32000
hence Total flexible budget variance=32000-20505=11495
b) Fixed Flexible budget for overhead=7385
Standard Fixed OH Cost applied=1.7*4100=6970
hence Fixed overhead production volume variance=7385-6970=415
c) Total Standard OH applied= Variable OH applied + Fixed OH applied=3.2*4100+1.7*4100=20090
hence Total Factory OH cost variance= Total Overhead incurred -Total Standard OH applied=32000-20090=11910
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.