Flash - Student Mukhtar Lakha Instructor Robert Nicholson Date E10-29A(similar to Course Acct2302-7502-Robert Nicholson-Fall 2011 Book Braun

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Unformatted text preview: Student: Mukhtar Lakha Instructor: Robert Nicholson Date: 11/20/11 E10-29A (similar to) Course: Acct2302-7502-Robert Nicholson-Fall 2011 Book: Braun: Managerial Accounting, 2e Time: 8:08 PM Fresh — Cut processes bags of organic frozen vegetables sold at specialty grocery stores. Fresh - Cut allocates manufacturing overhead based on direct labor hours. Fresh - Cut actually processed 340,000 cases of frozen organic vegetables during the year and incurred $1,630,000 of manufacturing overhead. Of this amount, $1,450,000 was fixed. - 7-; (Click the icon to view the additional data.) Requirements 1.What is the flexible budget (for the actual output) for variable overhead? for fixed overhead? for total overhead? 2.How much overhead would have been allocated to production? 3.Use your answer from Requirement 1 to determine the overhead flexible budget variance. What does this tell managers? 4.Use your answer from Requirements 1 and 2 to determine the production volume variance. What does this tell managers? 5.What is the total overhead variance? Requirement 1. Calculate these amounts for the flexible budget (for the actual output): the variable overhead, th< overhead and the total overhead. Fresh-Cut Flexible Budget for Actual Outputs Variable manufacturing overhead $ 170,000V Fixed manufacturing overhead 1,440,000 V Total manufacturing overhead $ 1,610,000 V Requirement 2. Determine the formula used to calculate the overhead allocated, then calculate how much overh been allocated to production. (Enter amounts to two decimal places.) V Actual cases processed x Direct labor standard x Standard total overhead rate V V V 340,000 x 0.50 X $ 10 Ovei $ Requirement 3. Complete the formula to find the overhead flexible budget variance, then use your answer from i to determine the amount. (Enter the results as positive numbers. Label each variance as favorable (F) or unfavor: V V Actual overhead cost — Flexible budget overhead—actual outputs = Overhead flexible bl V V $ 1,630,000 — 1,610,000 = $ 20,000 This variance tells managers that Fresh — Cut actually incurred $ 20000 more‘ for manufacturing overhead thar have expected for the actual volume produced during the year. Requirement 4. Determine the formula, then use your answers from Requirements 1 and 2 to determine the pror variance. (Enter the results as positive numbers. Label each variance as favorable (F) or unfavorable (U).) V V — Standard overhead allocated to production = V V 15 1,610,000 — 1,700,000 = $ Production volw 90,000 Flexible budget overhead—actual outputs V This variance tells managers that $ 90,000‘ of the total overhead variance arose because Fresh - Cut prod cases of vegetables than originally expected. It is favorable , because Fresh - Cut used its plant capacity m: than originally anticipated. Requirement 5. Complete the formula, then calculate the total overhead variance. (Enter the results as positive r Page 1 Student: Mukhtar Lakha Course: Acct2302-7502-Robert Nicholson-Fall 201 l Instructor: Robert Nicholson Book: Braun: Managerial Accounting, 2e Date: 11/20/11 Time: 8:08 PM E10_29A each variance as favorable (F) or unfavorable (U).) (similar ‘ _ . ‘ _ t ) Actual overhead cost Standard overhead allocated to production — Total overhead v o $ 1,630,000 ‘ — $ 1,700,000 ‘ = $ 70,000 (cont) Data Table Standard variable overhead rate $1 Standard fixed overhead rate $9 Standard total overhead rate $10 Amount of cases processed 320,000 Standard fixed overhead $1,440,000 Direct labor standard for each case 0.50 hr Fresh-Cut Flexible Budget for Actual Outputs Variable manufacturing overhead 1630000 Fixed manufacturing overhead nothing Total manufacturing overhead nothing YOU ANSWERED: — Actual cases processed x Budgeted fixed overhead x Standard total ov 210000 x nothing x nothing Flexible budget overhead—actual outp... — Standard total overhead rate = 320000 — nothing = less Standard overhead allocated to production — Standard total overhead rate 15000 — nothing 25000 fixed Standard total overhead rate - Total manufacturing overhead rate 170000 - nothing Page 2 ...
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This note was uploaded on 01/13/2012 for the course ACCOUNTING 2302 taught by Professor Harris during the Fall '11 term at Dallas Colleges.

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Flash - Student Mukhtar Lakha Instructor Robert Nicholson Date E10-29A(similar to Course Acct2302-7502-Robert Nicholson-Fall 2011 Book Braun

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