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# Class_Answers_Tuesday_Ch11 - Exercise 11-11(20 minutes 1...

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Exercise 11-11  (20 minutes) 1. \$33,200 Overall rate:  = \$4.15 per MH 8,000 MHs \$8,400 Variable rate:  = \$1.05 per MH 8,000 MHs \$24,800 Fixed rate:  = \$3.10 per MH 8,000 MHs 2. The standard hours per unit of product are: 8,000 MHs  ÷  3,200 units = 2.5 MHs per unit The standard hours allowed for the actual production would be: 3,500 units  ×  2.5 MHs per unit = 8,750 MHs 3. Variable overhead  spending variance = (AH  ×  AR) – (AH  ×  SR) = (\$9,860) – (8,500 MHs  ×  \$1.05 per MH) = (\$9,860) – (\$8,925) = \$935 U Variable overhead  efficiency variance = SR (AH – SH) = \$1.05 per MH (8,500 MHs – 8,750 MHs)  = \$262.50 F

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Exercise 11-11  (continued) Fixed overhead budget and volume variances: Actual Fixed  Overhead  Cost Budgeted Fixed  Overhead Cost Fixed Overhead Cost  Applied to  Work in Process \$25,100 \$24,800* 8,750 standard MHs ×  \$3.10 per MH = \$27,125 Budget Variance,  \$300 U Volume Variance,  \$2,325 F Total Variance, \$2,025 F *8,000 denominator MHs  ×  \$3.10 per MH = \$24,800. Alternative approach to the budget variance: Budget Actual Fixed Budgeted Fixed =  -  Variance Overhead Cost Overhead Cost =  \$25,100 - \$24,800 =  \$300 U Alternative approach to the volume variance: ( ) Fixed Portion of Volume Denominator Standard Hours = the Predetermined   -  Variance Hours Allowed Overhead Rate =  \$3.10 per MH (8,000 MHs - 8,750 MHs) =  \$2,325 F

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Class_Answers_Tuesday_Ch11 - Exercise 11-11(20 minutes 1...

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