Chapter 10 Sol - Part 2(1)

Chapter 10 Sol - Part 2(1) - Exercise1015(20minutes)...

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Exercise 10-15 (20 minutes) 1. Overall rate   = $33,200  ÷  8,000 MHs = $4.15 per MH     Variable rate = $8,400  ÷  8,000 MHs   = $1.05 per MH     Fixed rate     = $24,800  ÷  8,000 MHs = $3.10 per MH 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 x $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 10-15  (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 variance = Actual fixed overhead cost – budgeted fixed  overhead cost                             = $25,100 – $24,800 = $300 U      Alternative approach to the volume variance:      Volume variance = Fixed portion   of the predetermined × (Denominator hours - 
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This note was uploaded on 12/04/2011 for the course ADM 2341 taught by Professor Managerialaccounting during the Spring '07 term at University of Ottawa.

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Chapter 10 Sol - Part 2(1) - Exercise1015(20minutes)...

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