ElizabethHampton_ACG3341-1_Week9

ElizabethHampton_ACG3341-1_Week9 - Exercise818: The French...

Info icon This preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
Exercise 8-18: Variable manufacturing overhead variance analysis The French Bread Company bakes baguettes for distribution to upscale grocery stores. The company has two direct-costs categories: direct materials and direct manufacturing labor Variable manufacturing overhead is allocated to products on the basis of standard direct manufacturing labor-hours. Following is some budget data for the French Bread Company: Direct manufacturing labor use 0.02 hours per baguette Variable manufacturing overhead $10.00 per direct manufacturing labor hour The French Bread Company provides the following additional data for the year ended December 31, 2012: Actual production 2,800,000 baguettes Planned (budgeted) output 3,200,000 baguettes Direct manufacturing labor 50,400 hours Actual variable manufacturing overhead $680,400 1 What is the denominator level used for allocating variable manufacturing overhead? (that is for how many direct manufacturing labor hours is French Bread budgeting?) Analysis of variable manufacturing overhead variance 2 Prepare a variance analysis of variable manufacturing overhead. Use Exhibit 8-4 (p.277 for reference. 1. Output Units 2,800,000 2,800,000 (baguettes) 2. Direct manufacturing/ labor-hours 50,400 labor-hours 56,000labor-hours 3. Labor-hours per output unit (2 ÷1) 0.018 labor hours per unit 0.020 labor hours per unit 4. Variable manufacturing overhead costs $680,400 $560,000 5. Variable MOH per labor-hour (4 ÷2) $13.50 MOH labor hour per unit $10 MOH labor hour per unit 6. Variable MOH per output unit (4 ÷1) $0.243 MOH per output unit $0.20 MOH per output unit Actual Costs Incurred Actual Input Flexible Budget: Allocated: Actual Input Quantity Quantity Budgeted Input Quantity Allowed Budgeted Input Quantity Allowed × Actual Rate × Budgeted Rate for Actual Output × Budgeted Rate for Actual Output × Budgeted Rate (50,400 × $13.50) (50,400 × $10) (56,000 × $10) (56,000 × $10) $680,400 $504,000 $560,000 $560,000 $176,400 U $56,000F <--------> <--------> <-----------> Spending variance
Image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern