Question

The Protocols Corporation is a manufacturer of centrifuges. Fixed and variable manufacturing overheads are allocated to each centrifuge using budgeted​ assembly-hours. Budgeted assembly time is 2 hours per unit. The following table shows the budgeted amounts and actual results related to overhead for June 2017

Actual	Static
The Protocols Corporation (June 2017)	Results	Budget
Number of centrifuges assembled and sold	230	160
Hours of assembly time	391
Variable manufacturing overhead cost per hour of assembly time		$28.00
Variable manufacturing overhead costs	$11,364
Fixed manufacturing overhead costs	$16,090	$14,720

1.	Prepare an analysis of all variable manufacturing overhead and fixed manufacturing overhead variances.
2.	Prepare journal entries for Protocols. June 2017 variable and fixed manufacturing overhead costs and variances, write off these variances to Cost of Goods Sold for the quarter ending June 30, 2017.

3.	How does the planning and control of variable manufacturing overhead costs differ from the planning and control of fixed manufacturing overhead​ costs?

Answer 1

Particulars	UOM	Actual	Budget	Variance
Hours of assemble time	hours	391.00	320.00	71.00
Variable overhead cost per hour	in $ per hour	29.06	28.00	1.06
No of centrifuges assembled and sold	Nos	230	160	70.00
Fixed production overheads	in $	16090	14720	1,370.00
Stanadard hours for actual production	460

Fixed overhead variance= Fixed overhead spending variance+fixed overhead Volume variance
Actual cost	16090
Standard cost	12,880	(Standard hours of actual output X standard rate (2X230X28))
Budgeted amount	14720
Spent varaince =	1370	Adverse
Volume variance =	3,210	Positive
Total Fixed cost variance =	1,840	Positive

Standard cost of production
output	230
Standard hours per assembling	2
Standard hours for actual output	460
Standard hour rate per hour of labour	28
Standard cost of variable overhead	12880	a
Actual cost of variable overhead
Standard Variable overhead cost per hour	28.00
Actual hours for actual output	391.00
Actual cost of variable overhead	10,948	b
Efficiency Variance	1,932	(a-b) positive variance
Efficiency variance	1,932.00