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...
In the experience section of the résumé, the focus should be on
A) responsibilities of the job. B) abilities developed in coursework. C) training sponsored by businesses. D) high school or military training. E) what you accomplished in each position.
Having a compensating balance increases a company's liquidity
Indicate whether the statement is true or false
Maria Elena has been hired as a manger in the accounts receivable department. While trained in accounting, her activities as an accounting manager are often also referred to as ______.
a. investments b. funds c. profitability d. finance
When setting professional fees, which of the following should LEAST likely be considered?
A) professional experience B) exclusivity of skills C) number of channels D) value to clients E) target market