Amnesty Elements uses a standard cost system, applying manufacturing overhead on the basis of machine hours. The company's overhead standards per unit are shown below. Variable overhead: 4 hours at $9 per hour Fixed overhead: 4 hours at $6* per hour *Based on planned monthly activity of 120,000 machine hours Actual data for May were: Number of units produced: 29,000 Number of machine hours worked: 125,000 Variable overhead costs incurred: $1,085,000 Fixed overhead costs incurred: $755,000Required: A. Calculate the spending and efficiency variances for variable overhead.B. Calculate the budget and volume variances for fixed overhead.
What will be an ideal response?
A. Spending variance: $1,085,000 - (125,000 × $9) = $40,000F
Efficiency variance: (125,000 × $9) - (29,000 × 4 × $9) = $81,000U
B. Budget variance: $755,000 - (120,000 × $6) = $35,000U
Volume variance: (120,000 × $6) - (29,000 × 4 × $6) = $24,000U*
*Some accountants choose to label a positive volume variance as "unfavorable," while others prefer to omit the unfavorable/favorable label altogether.
You might also like to view...
Which of the following generational cohorts are the grandparents of the Millenials?
A) Silent Generation B) Generation X C) GI Generation D) Generation Y
Palette Paints, Inc expends funds and takes steps to ensure that all employees are safe on the job, that all products are safe for consumers, and that the environmental impact of the corporation is minimal. Palette Paints appears to believe in the concept of
a. the moral minimum. b. corporate social responsibility. c. "grey areas" in the law. d. government oversight.
List the three variations of OUTER JOIN?
What will be an ideal response?
Schwiesow Corporation has provided the following information: Cost per UnitCost per PeriodDirect materials$7.05 Direct labor$3.50 Variable manufacturing overhead$1.65 Fixed manufacturing overhead $11,000Sales commissions$1.00 Variable administrative expense$0.40 Fixed selling and administrative expense $5,500If 6,000 units are produced, the total amount of direct manufacturing cost incurred is closest to:
A. $86,400 B. $73,200 C. $63,300 D. $69,300