Berk Incorporated makes a single product--a critical part used in commercial airline seats. The company has a standard cost system in which it applies overhead to this product based on the standard machine-hours allowed for the actual output of the period. Data concerning the most recent year appear below:?Budgeted (Planned) Overhead:???Budgeted variable manufacturing overhead$84,075??Budgeted fixed manufacturing overhead$221,730??????Budgeted production (a)15,000units?Standard hours per unit (b)1.90machine-hours?Budgeted hours (a) × (b)28,500machine-hours?????Applying Overhead:???Actual production (a)13,000units?Standard hours per unit (b)1.90machine-hours?Standard hours allowed for the actual production (a) ×
(b)24,700machine-hours?????Actual Overhead and Hours:???Actual variable manufacturing overhead$77,675??Actual fixed manufacturing overhead$237,730??Actual hours23,900machine-hoursRequired:a. Compute the variable component of the company's predetermined overhead rate.b. Compute the fixed component of the company's predetermined overhead rate.c. Determine the variable overhead rate variance for the year.d. Determine the variable overhead efficiency variance for the year.e. Determine the fixed overhead budget variance for the year.f. Determine the fixed overhead volume variance for the year.
What will be an ideal response?
a. Variable component of the predetermined overhead rate = $84,075/28,500 machine-hours
= $2.95 per machine-hour
b. Fixed component of the predetermined overhead rate = $221,730/28,500 machine-hours
= $7.78 per machine-hour
c. Variable overhead rate variance = (AH × AR) ? (AH × SR)
= ($77,675) ? (23,900 machine-hours × $2.95 per machine-hour)
= ($77,675) ? ($70,505)
= $7,170 U
d. Variable overhead efficiency variance = (AH ? SH) × SR
= (23,900 machine-hours ? 24,700 machine-hours) × $2.95 per machine-hour
= (-800 machine-hours) × $2.95 per machine-hour
= $2,360 F
e. Budget variance = Actual fixed overhead ? Budgeted fixed overhead
= $237,730 ? $221,730 = $16,000 U
f. Volume variance = Budgeted fixed overhead ? Fixed overhead applied to work in process
= $221,730 ? ($7.78 per machine-hour × 24,700 machine-hours)
= $221,730 ? ($192,166)
= $29,564 U
or
Volume variance = Fixed component of the predetermined overhead rate x (Denominator hours ? Standard hours allowed for the actual output)
= $7.78 per machine-hour x (28,500 machine-hours ? 24,700 machine-hours)
= $7.78 per machine-hour x (28,500 machine-hours ? 24,700 machine-hours)
= $7.78 per machine-hour x (3,800 hours)
= $29,564 U
You might also like to view...
Nadal Company On October 1, 2012, Nadal Company received a $50,000 promissory note from Borg Company. The annual interest rate is 6%. Principal and interest will be collected in cash at the maturity date of September 30, 2013. Refer to the information provided for Nadal Company. The effect on Nadal's financial statements on September 30, 2013, is as follows:
A) Assets and equity increase B) No net change in equity C) Assets and liabilities increase D) No net change in assets
Which sentence is punctuated correctly?
A) In order to succeed in college, students must possess a key skill they need to use good time-management techniques. B) In order to succeed in college, students must possess a key skill, they need to use good time-management techniques. C) In order to succeed in college, students must possess a key skill: they need to use good time-management techniques.
Revised Article 9 of the UCC only applies to goods and does not include intangibles such as accounts or chattel paper
a. True b. False Indicate whether the statement is true or false
The Worker Adjustment and Retraining Notification Act requires notification to be given:
A) Six months in advance for any plant closing. B) Sixty days in advance for plant closings resulting in the loss of 50 or more jobs, but not for temporary layoffs. C) Sixty days in advance for any plant closing. D) Sixty days in advance for plant closings resulting in the loss of 50 or more jobs, and for layoffs of 50 employees or 33 percent of workers at a site for 30 days or more. E) Sixty days in advance for plant closings resulting in the loss of 50 or more jobs, and 30 days in advance for layoffs affecting more than 33 workers at the site.