8-21 22 27 40.docx - 8-21 Variable manufacturing overhead...

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8-21Variable manufacturing overhead, variance analysis.1.Variable Manufacturing Overhead Variance Analysis for Esquire Clothing for June 2017Actual CostsIncurredActual Input Qty. × Actual Rate(1)Actual Input Qty. × Budgeted Rate(2)Allocated Budget:Budgeted Input Qty.Allowed for Actual Output × Budgeted Rate(3)(4,536 × $11.50)$52,164(4,536 × $12)$54,432(4 × 1,080 × $12)$51,8402.Esquire had a favorable spending variance of $2,268 because the actual variable overheadrate was $11.50 per direct manufacturing labor-hour versus $12 budgeted. It had an unfavorableefficiency variance of $2,592 U because each suit averaged 4.2 labor-hours (4,536 hours ÷ 1,080suits) versus 4.0 budgeted labor-hours.1$2,592 UEfficiency variance$2,268 FSpending variance$324 UFlexible-budget variance
8-22Fixed-manufacturing overhead, variance analysis (continuation of 8-21).1 & 2.Budgeted fixed overheadrate per unit ofallocation base=$62,4001,040×4=$62,4004,160=$15 per hourFixed Manufacturing Overhead Variance Analysis for Esquire Clothing for June 2017Actual CostsIncurred(1)Flexible Budgeted Lump Sum(as in Static Budget)Regardless ofOutput Level(2)Allocated:Budgeted Input QtyAllowed for ActualOutputX Budgeted Rate(3)$63,916$62,400(4 ×1,080 ×$15)$64,800$1,516 U$2,400 FSpending varianceProduction-volume variance$1,516 U$2,400 FFlexible-budget varianceProduction-volume varianceThe fixed manufacturing overhead spending variance and the fixed manufacturingflexible budget variance are the same––$1,516 U. Esquire spent $1,516 above the $62,400budgeted amount for June 2017.The production-volume variance is $2,400 F. This arises because Esquire utilized itscapacity more intensively than budgeted (the actual production of 1,080 suits exceeds the

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