Allowed for actual output budgeted rate 4 fixed moh

This preview shows page 77 - 85 out of 99 pages.

Allowed forActual Output× Budgeted Rate(4)FixedMOH
$597,460$640,0000.80 × 50,000 × $16$640,0000.80 x 30,000 × $16$384,0008-40(3050 min.)Review of Chapters 7 and 8, three-variance analysis.1.Total standard production costs are based on 7,800 units of output.Direct materials, 7,800  $15.007,800  3 kg  $5.00 (or 23,400 kg  $5.00)$ 117,000Direct manufacturing labour, 7,800  $75.007,800  5 hrs.  $15.00 (or 39,000 hrs.  $15.00) 585,000Manufacturing overhead:Variable, 7,800  $30.00 (or 39,000 hrs.  $6.00) 234,000Fixed, 7,800  $40.00 (or 39,000 hrs.  $8.00)312,000Total$1,248,000The following is for later use:Fixed manufacturing overhead, a lump-sum budget$320,000**Fixed manufacturing overhead rate =Budgeted fixed manufacturing overheadDenominator level $8.00=
Budget=40,000 hours  $8.00 = $3200002.Solution Exhibit 8-40 presents a columnar presentation of the variances. An overview of the three-variance analysis using the block format of the text is:Three-Variance AnalysisRateVarianceEfficiencyVarianceProductionVolume VarianceTotal Manufacturing Overhead$39,400 U$6,600 U$8,000 UActual CostsIncurred:Actual Input Qty.Actual Input Qty.Budgeted PriceFlexible Budget:Budgeted Input Qty.Allowed for Actual Output
× Actual RatePurchasesUsage× Budgeted PriceDirectMaterials(25,000  $5.20)$130,000(25,000  $5.00)$125,000(23,100  $5.00)$115,500(23,400  $5.00)$117,000$5,000 U$1,500 Fa. Rate varianceb. Efficiency varianceDirectManuf.Labour(40,100  $14.60)$585,460(40,100  $15.00)$601,500(39,000  $15.00)$585,000$16,040 F$16,500 Uc. Rate varianced. Efficiency varianceActual CostsIncurred
Actual Input Qty. Budgeted RateFlexible Budget:Budgeted Input Qty.Allowed forActual Output Budgeted RateAllocated:(Budgeted Input Qty.Allowed forActual Output Budgeted Rate)VariableManuf.Overhead(not given)(40,100  $6.00)$240,600(39,000  $6.00)$234,000(39,000  $6.00)$234,000$6,600 UEfficiency varianceNever a variance
FixedManuf.Overhead(not given)$320,000$320,000(39,000  $8.00)$312,000$8,000 U*Never a varianceProdn. volume varianceTotalManuf.Overhead(given)$600,000($240,600 + $320,000)$560,600($234,000 + $320,000)$554,000($234,000 + $312,000)$546,000
$39,400 U$6,600 U$8,000 Ue. Rate variancef. Efficiency varianceg. Prodn. volume variance*Denominator level in hours40,000Production volume in standard hours allowed39,000Production-volume variance1,000 hours × $8.00 = $8,000 U8-41 (20 min.) Nonfinancial and non-manufacturing variances1. Variance Analysis of Inspection Hours for Belle’s Treats for MayActual KilogramsStandard KilogramsInspectedActual HoursInspected/Budgetedfor Actual Output /BudgetedFor InspectionsKilograms per hourKilograms per hour200,000 kg/1,000 kg/hr (2,250,000 × 0.1)/1,000 kg/hr210 hours200 hours225 hours10 hours U25 hours FEfficiency variance Quantity variance2. Variance Analysis of Kilograms Failing Inspection for Belle’s Treats for MayActual KilogramsStandard Kilograms InspectedActual KilogramsInspected × Budgetedfor Actual Output × BudgetedFailing Inspections Inspection Failure Rate Inspection Failure Rate(200,000 kg × 0.02)(2,250,000 × 0.1 × 0.02)3,500 kg4,000 kg4,500 kg
500 kg F500 kg FEfficiency variance Quantity variance8-42 (20 min.) Nonfinancial performance measures1. The cost of the ball bearings would be indirect materials if it is either not possible to trace the costs to individual products, or if the cost is so small relative to other costs that it is impractical to do so.

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture