Homework Answers
Answer :
For the Fixed overhead
1 (a) Budgeted amount = Total overhead budgeted - Variable overhead budgeted
= $ 31250000 - 2500000 hour * $ 11
= $ 3750000
1 (b) Budgeted cost per machine hour = Budgeted Fixed overhead / Budgeted Machine hour
= $ 3750000/ 2500000 hour
= $ 1.50 per hour
1 (c) Computation of Actual cost of Fixed oh
Fixed overhead rate variance = Budgeted fixed overhead - Actual Fixed oh
- $ 1500000 = $ 3750000 - Actual Fixed oh
Actual Fixed oh = $ 5250000
1 (d) Production volume variance = Absorbed fixed overhead - Budgeted Fixed overhead
= $ 3735000 - $ 3750000
= $ 15000 U
Working note -1
Absorbed Fixed overhead = Standard rate per hour * Standard hour for actual output
= $ 1.50*2490000hour = $ 3735000
Standard hour for actual Output = 1245000unit* 2 hour = 2490000 hour
Standard hour per unit required = $ 22/ $11 = 2 hour per unit
2 .Variable overhead rate variance
= ( Standard rate - Actual Rate ) * Actual hour
= Standard rate * Actual hour - Actual rate * Actual hour
= $ 11*2400000 hour - $ 25200000
= $ 1200000 F
Variable overhead efficiency variance
=Standard rate ( Standard hour - Actual hour )
= $ 11 ( 2490000 hour - 2400000 hour )
= $ 990000 F
Note -1
F = Favorable
U = Un favorable
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