Question

[The following information applies to the questions displayed below.] Sedona Company set the following standard costs for one unit of its product for this year. Direct material (15 Ibs. @ $3.80 per Ib.) Direct labor (10 hrs. @ $9.40 per hr.) Variable overhead (10 hrs. @ $4.20 per hr.) Fixed overhead (10 hrs. @ $2.50 per hr.) Total standard cost $ 57.00 94.00 42.00 25.00 $218.00 The $6.70 ($4.20 + $2.50) total overhead rate per direct labor hour is based on an expected operating level equal to 60% of the factory's capacity of 64,000 units per month. The following monthly flexible budget information is also available. Operating Levels (% of capacity) 55% 60% 65% 35,200 38,400 41,600 352,000 384,000 416,000 Flexible Budget Budgeted output (units) Budgeted labor (standard hours) Budgeted overhead (dollars) Variable overhead Fixed overhead Total overhead $1,478,400 960,000 $2,438,400 $1,612,800 960,000 $2,572,800 $1,747,200 960,000 $2,707,200

Answer 1

Solution 1 and 2:

Actual output units = 64000*55% = 35200 units

P R S T V W X 2 Predetermined 5 overhead rate Variable Overhead costs $4.20 6 Fixed Overhead costs $2.50 7 $6.70 Total overhead costs Predetermined Standard DL Overhead costs Fav./Unf. 10 Actual results variance overhead rate Hours (35200* 10 applied $4.20 $2.50 $6.70 $57,400 Favorable $144,000 Unfavorable $86,600 Unfavorable $1,478,400 $880,000 $2,358,400 $1,421,000 Variable Overhead costs 352000 11 Fixed Overhead costs $1,024,000 12 352000 Total overhead costs $2,445,000 13 14 15 16 17 18 19 20 21 22 23 817 (4) Sheet595 (5) Sheet247 (2) Sheet911 Sheet912 Sheet914 Sheet915 Sheet917 ПI