Answer:
1 | |||||||
(a) | Flexible budget variance: | ||||||
Standard overhead application rates: | |||||||
Budgeted fixed ovehead | |||||||
Engineering support | 15000 | ||||||
Insurance | 5000 | ||||||
Property taxes | 12000 | ||||||
Depreciation | 13800 | ||||||
Supervisory salaries | 14800 | ||||||
Setup labor | 2400 | ||||||
Materials handling | 2500 | ||||||
65500 | |||||||
Variable overhead | $21 | ||||||
Flexible budget variance: | |||||||
Actual overhead cost: | |||||||
Fixed: | |||||||
Engineering support | 15500 | ||||||
Insurance | 5500 | ||||||
Property taxes | 12000 | ||||||
Depreciation | 13800 | ||||||
Supervisory salaries | 14800 | ||||||
Setup labor | 2200 | ||||||
Materials handling | 2400 | 66200 | |||||
Variable | |||||||
Electricity | 8.5 | ||||||
Indirect materials | |||||||
Material A | 1 | ||||||
Material B | 4 | ||||||
Maintenance labor | 6 | ||||||
Manufacturing supplies | 2.1 | ||||||
Total | 21.6 | ||||||
Machinehours (actual) | 5600 | ||||||
Variable manufacturing overhead | (5600*21.6) | 120960 | |||||
Actual overhead cost (A) | 187160 | ||||||
Overhead as per flexible budget: | |||||||
Fixed | 65500 | ||||||
Variable overhead rate | $21 | ||||||
Standard allowed machine hours | 5500 | ||||||
Variable overhead | $1,15,500 | ||||||
Flexible overhead cost (B) | (65500+115500) | 181000 | |||||
Flexible budget variance (A)-(B) | 6160 | Unfavorable | |||||
(b) | Fixed overhead production volume variance: | ||||||
Denomiator activity level | 6500 | ||||||
Standard allowed machine hours | 5500 | ||||||
Diff. (a) | 1000 | ||||||
Standard fixed overhead rate per hour | |||||||
(65500/6500) | 10.07692308 | ||||||
Rounded off to (b) | 10 | ||||||
Fixed overhead production volume variance (a)*(b) | 10000 | Unfavorable | |||||
2 | Debit | Credit | |||||
Factory overhead | 66200 | ||||||
Salaries payable-Engineering support | 15500 | ||||||
Insurance payable | 5500 | ||||||
Property taxes payable | 12000 | ||||||
Depreciation | 13800 | ||||||
Salaries payable-supervisory labor | 14800 | ||||||
Wages payable-Setup labor | 2200 | ||||||
Wages payable-materials handling labor | 2400 | ||||||
(To record fixed overhead) | |||||||
Factory overhead | 120400 | ||||||
Utilities payable | (5600*8.50) | 47600 | |||||
Indirect materials-A | (5600*1) | 5600 | |||||
Indirect materials-B | (5600*4) | 22400 | |||||
Maintenance labor | (5600*6) | 33600 | |||||
Manufacturing supplies (5600*2) | 11200 | ||||||
(To record variable overhead) | |||||||
Work in process | 115500 | ||||||
Factory overhead | 115500 | ||||||
(To apply standard variable overhead rate) | |||||||
Work in process | (5500*10) | 55000 | |||||
Factory overhead | 55000 | ||||||
(To apply standard fixed overhead rate) |
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