Medal Corporation uses direct labor hours to allocate factory overhead. During the period, the company produced...

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Answer 1

Answer #1

Answer to Question a:

x1=Variable Cost at 1` 00% Capacity =$20500 x2=Variable Cost at given Capacity= $21000

y1= No of units at 100% Capacity= 5000units y2= No of units at given Capacity= 5100 units

Variable Factory Overhead Rate=

Change in Variable Cost/ Change in Units= x2-x1/y2-y1 = $21000- $20500/ (5100-5000)

=$5 per unit

Answer to Question b:

Budgeted OH Rate = (40500- 38450)/(5000-4500)

= $4.1

Variable Factory Overhead Controllable Variance=

Actual Variable Factory Overhead- Budgeted Variable Factory Overhead=

= $21000- ( 5100 units * $4.1)

= $21000- $20910

=$90(A)

Answer to Question c:

Variable Factory Overhead Controllable Variance is an adverse variance as actual Variable Factory Overhead is more than budgeted variable Factory Overhead.

Answer to Question d:

Fixed Factory Overhead Rate =

= (40500- 38450)/(5000-4500)

= $4.1

Answer to Question e:

Budgeted Fixed Overhead=$20000

Total Applied Fixed Overhead at 5100 units = 5100 units * $4.1 = $20910

Fixed Factory Overhead Volume Variance= Applied Fixed Overhead- Budgeted Fixed Overhead

= $20910-$20000

=$910(F)

Answer to Question f:

Fixed Factory Overhead Volume Variance is Favourable as OH absorbed is more than budgeted.

Answer to Question g

Actual Total Factory Overhead Cost at 5100 units = Variable Factory Overhead Cost+Total Fixed Costs

=$21000+ $20000 = $41000

Applied Total Factory Overhead Cost at 5100 units = ($5100*4.1+$20000)

= $40910

Total Factory Overhead Cost Variance= Actual Cost - Applied Cost

= $41000- $40910

=$90(A)

As actual Factory Overhead Cost is more than recovered it is an adverse Variance.

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Medal Corporation uses direct labor hours to allocate factory overhead. During the period, the company produced...

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