Week 4 Chat Solutions

# Week 4 Chat Solutions - Week 4 Chat Solutions 8-18 1 2 1...

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Week 4 Chat Solutions 8-18 (30 min.) Variable manufacturing overhead variance analysis. 1. Denominator level = (3,200,000 × 0.02 hours) = 64,000 hours 2. Actual Results Flexible Budget Amounts 1. Output units (baguettes) 2,800,000 2,800,000 2. Direct manufacturing labor-hours 50,400 56,000 a 3. Labor-hours per output unit (2 ÷ 1) 0.018 0.020 4. Variable manuf. overhead (MOH) costs \$680,400 \$560,000 5. Variable MOH per labor-hour (4 ÷ 2) \$13.50 \$10 6. Variable MOH per output unit (4 ÷ 1) \$0.243 \$0.200 a 2,800,000 0.020= 56,000 hours Variable Manufacturing Overhead Variance Analysis for French Bread Company for 2012 Actual Costs Incurred Actual Input Quantity × Actual Rate (1) Actual Input Quantity × Budgeted Rate (2) Flexible Budget: Budgeted Input Quantity Allowed for Actual Output × Budgeted Rate (3) Allocated: Budgeted Input Quantity Allowed for Actual Output × Budgeted Rate (4)

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(50,400 × \$13.50) \$680,400 (50,400 × \$10) \$504,000 (56,000 × \$10) \$560,000 (56,000 × \$10) \$560,000 3. Spending variance of \$176,400 U. It is unfavorable because variable manufacturing overhead was 35% higher than planned. A possible explanation could be an increase in energy rates relative to the rate per standard labor-hour assumed in the flexible budget. Efficiency variance of \$56,000 F. It is favorable because the actual number of direct manufacturing labor-hours required was lower than the number of hours in the flexible budget. Labor was more efficient in producing the baguettes than management had anticipated in the budget. This could occur because of improved morale in the company, which could result from an increase in wages or an improvement in the compensation scheme. Flexible-budget variance of \$120,400 U. It is unfavorable because the favorable efficiency variance was not large enough to compensate for the large unfavorable spending variance. 8-23 (30 - 40 min.) Straightforward coverage of manufacturing overhead, standard- costing system. 1. Solution Exhibit 8-23 shows the computations. Summary details are: Actual Flexible Budget Output units 65,500 65,500 Allocation base (machine-hours) 76,400 78,600 a
Allocation base per output unit 1.17 b 1.2 Variable MOH \$618,840 \$628,800 c Variable MOH per hour \$8.92 d \$8.00 Fixed MOH \$145,790 \$144,000 Fixed MOH per hour \$1.91 e a 65,500 × 1.2 = 78,600 d \$618,840 ÷ 76,400 = \$8.10 b 76,400 ÷ 65,500 = 1.17 e \$145,790 ÷ 76,400 = \$1.91 c 65,500 × 1.2 × \$8 = \$628,800 An overview of the 4-variance analysis is: 4-Variance Analysis Spending Variance Efficiency Variance Production - Volume Variance Variable Manufacturing Overhead \$7,640 U \$17,600 F Never a variance Fixed Manufacturing Overhead \$1,790 U Never a variance \$13,200 F

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2. Variable Manufacturing Overhead Control 618,840
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## This note was uploaded on 05/12/2011 for the course ACCT 433a taught by Professor Alfredcontreras during the Spring '11 term at National.

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Week 4 Chat Solutions - Week 4 Chat Solutions 8-18 1 2 1...

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