Eastern Company uses a standard cost system in which manufacturing overhead is applied to units of product on the basis of standard direct labor-hours (DLHs). The denominator activity level is 60,000 direct labor-hours, or 300,000 units.• A standard cost card for the company's product follows:??Standard quantity or hoursStandard price or rateStandard cost?Direct materials0.25 kilogram$16 per kilogram$4?Direct labor0.20 DLH$10 per DLH 2?Variable overhead0.20 DLH$5 per DLH 1?Fixed overhead0.20 DLH$10 per DLH 2?Total standard cost??$9• Actual data for the year follow:?Units produced and sold330,000?Actual direct labor-hours worked64,800?Actual variable overhead cost$327,240?Actual fixed manufacturing overhead cost$612,000Required:a. Compute the variable
overhead rate and efficiency variances.b. Compute the fixed manufacturing overhead budget and volume variances.
What will be an ideal response?
a. Variable overhead variances:
Variable overhead rate variance = (AH × AR) ? (AH × SR)
= $327,240 ? (64,800 DLHs × $5.00 per DLH)
= $327,240 ? $324,000
= $3,240 U
Variable overhead efficiency variance = (AH ? SH) × SR
= (64,800 DLHs ? 66,000 DLHs*) × $5.00 per DLH
= (?1,200 DLHs) × $5.00 per DLH
= $6,000 F
* 330,000 units × 0.20 DLH per unit = 66,000 DLHs
b. Fixed overhead variances:
Budget variance = Actual fixed manufacturing overhead ? Budgeted fixed manufacturing overhead
= $612,000 ? $600,000
= $12,000 U
Volume variance = Fixed component of the predetermined overhead rate x (Denominator hours ? Standard hours allowed for the actual output)
= $10.00 per DLH × (60,000 DLHs ? 66,000 DLHs)
= $10.00 per DLH × (?6,000 DLHs)
= $60,000 F
You might also like to view...
Hawala is a
A. category of loan at the bank for International Settlements. B. banking system in Islamic banking. C. way to earn for the use of money that does not involve interest. D. money transfer method that is done with few traces.
Which of the following best capture(s) the concept of CSR as a corporate strategy?
A. A way for a company to position itself as environmentally friendly B. A company's commitment to addressing social problems and environmental issues, while remaining economically viable C. A way to grow additional revenue for a company D. A company's explicit consideration of the impact of its activities on all stakeholders affected by business decisions E. B and D only
A composite data type is a variable that can store and handle multiple values of the same data type as one unit.
Answer the following statement true (T) or false (F)
The two cases of Bank of Montreal v. Bal and Corey Developments, deal with the application of the parol evidence rule. Which of the following best explains the different results in these cases?
A) In Corey Developments, a party was trying to get out of a guarantee. In Bal, a party was trying to avoid a warranty. B) Corey involved a greater inequality of bargaining power than the other two cases. C) The contract in Corey Developments contained an entire agreement clause, but Bal did not. D) In Corey Developments, there was very clear external evidence of representations contradicting the terms of the contract, but in Bal the plaintiff's evidence was very weak E) Corey is an older case and the parol evidence rule is now applied more strictly