McDormand, Inc., reported a $3,500 unfavorable price variance for variable overhead and a $35,000 unfavorable price variance for fixed overhead. The flexible budget had $1,084,500 variable overhead based on 36,150 direct labor-hours; only 34,110 hours were worked. Total actual overhead was $1,829,800. The number of estimated hours for computing the fixed overhead application rate totaled 38,400 hours.
Required:
a. Prepare a variable overhead analysis.
b. Prepare a fixed overhead analysis.
RA) price variance= 3,500 U answer
or 1,026,800- 1,023,300= 3,500 U
1,084,500/ 36,150= 30 34,110* 30= 1,023,300
efficiency variance= 1,084,500- 1,023,300= 61,200 F answer
variable OH variance= 61,200- 3,500= 57,700 F answer
RB)
price variable= 35,000 U answer
step 1) 1,829,800- 1,026,800= 803,000
803,000- 35,000= 768,000
768,000/ 38400= 20
20* 36,150= 723,000
price variance 803,000- 768,000= 35,000 U
production volume variance 768,000- 723,000= 45,000 U answer
fixed overhead variance 35,000+ 45,000= 80,000 U answer
1,084,500- 1,026,800= 57,700
1,084,500- 57,700 (variable OH variance)= 1,026,800
McDormand, Inc., reported a $3,500 unfavorable price variance for variable overhead and a $35,000 unfavorable price variance for fixed overhead. The flexible budget had $1,084,500 variable overhead based on 36,150 direct labor-hours; only 34,110 hours wer
McDormand, Inc., reported a $3,500 unfavorable price variance for variable overhead and a $35,000 unfavorable price variance for fixed overhead. The flexible budget had $1,084,500 variable overhead based on 36,150 direct labor-hours; only 34,110 hours were worked. Total actual overhead was $1,829,800. The number of estimated hours for computing the fixed overhead application rate totaled 38,400 hours. Required:a. Prepare a variable overhead analysis.b. Prepare a fixed overhead analysis.
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