Fixed manufacturing overhead variance analysis

This preview shows page 36 - 38 out of 49 pages.

We have textbook solutions for you!
The document you are viewing contains questions related to this textbook.
Applied Calculus for the Managerial, Life, and Social Sciences
The document you are viewing contains questions related to this textbook.
Chapter 2 / Exercise 61
Applied Calculus for the Managerial, Life, and Social Sciences
Tan
Expert Verified
8-24Fixed manufacturing overhead variance analysis (continuation of 8-23). TheSourdough Bread Company also allocates fixed manufacturing overhead to products on the basisof standard direct manufacturing labor-hours. For 2017, fixed manufacturing overhead wasbudgeted at $3.00 per direct manufacturing labor-hour. Actual fixed manufacturing overheadincurred during the year was $294,000.Required:1.Prepare a variance analysis of fixed manufacturing overhead cost. Use Exhibit 8-4 (page 304)as a guide.2.Is fixed overhead underallocated or overallocated? By what amount?3.Comment on your results. Discuss the variances and explain what may be driving them.SOLUTION(30 min.) Fixed manufacturing overhead variance analysis (continuation of 8-23).1.Budgeted standard direct manufacturing labor used = 0.02 per baguetteBudgeted output= 3,100,000 baguettesBudgeted standard direct manufacturing labor-hours8-U$149,760 USpendingvariance$52,000 FEfficiencyvarianceNever avariance$97,760 UFlexible-budget varianceNever a
We have textbook solutions for you!
The document you are viewing contains questions related to this textbook.
Applied Calculus for the Managerial, Life, and Social Sciences
The document you are viewing contains questions related to this textbook.
Chapter 2 / Exercise 61
Applied Calculus for the Managerial, Life, and Social Sciences
Tan
Expert Verified
= 3,100,000 × 0.02= 62,000 hoursBudgeted fixed manufacturing overhead costs= 62,000 × $3.00 per hour= $186,000Actual output= 2,600,000 baguettesAllocated fixed manufacturing overhead= 2,600,000 × 0.02 × $3= $156,000Fixed Manufacturing Overhead Variance Analysis for Sourdough Bread Company for 2017Actual CostsIncurred(1)Same BudgetedLump Sum(as in Static Budget)Regardless ofOutput Level(2)Flexible Budget:Same Budgeted Lump Sum (as in Static Budget)Regardless ofOutput Level(3)Allocated:Budgeted Input Qty.Allowed forActual Output × Budgeted Rate(4)$294,000$186,000$186,000(2,600,000 × 0.02 × $3)$156,0002.The fixed manufacturing overhead is underallocated by $138,000.3.The production-volume variance of $30,000 U captures the difference between the budgeted3,100,0000 baguettes and the lower actual 2,600,000 baguettes produced—the fixed costcapacity not used. The spending variance of $108,000 unfavorable means that the actualaggregate spending on fixed costs ($294,000) exceeds the budgeted amount ($186,000).For example, monthly leasing rates for baguette-making machines may have increasedabove those in the budget for 2017.8-25Manufacturing overhead, variance analysis. The Rotations Corporation is amanufacturer of centrifuges. Fixed and variable manufacturing overheads are allocated to each8-U$108,000 USpendingvarianceNever a variance$30,000 UProduction-volumevariance$108,000 UFlexible-budget variance$30,000 UProduction-volumevariance$138,000 UUnderallocated fixed overhead(Total fixed overhead variance)

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture