Graphs and overhead variances. Best Around, Inc., is a manufacturer of vacuums and uses standard costing. Manufacturing overhead (both variable and fixed) is allocated to products on the basis of budgeted machine-hours. In 2017, budgeted fixed manufacturing overhead cost was $17,000,000. Budgeted variable manufacturing overhead was $10 per machine-hour. The denominator level was 1,000,000 machine-hours. 1. Prepare a graph for fixed manufacturing overhead. The graph should display how Best Around, Inc.'sfixed manufacturing overhead costs will be depicted for the purposes of (a) planning and control and(b) inventory costing.2. Suppose that 1,125,000 machine-hours were allowed for actual output produced in 2017, but 1,200,000actual machine-hours were used. Actual manufacturing overhead was $12,075,000, variable, and$17,100,000, fixed. Compute (a) the variable manufacturing overhead spending and efficiency variancesand (b) the fixed manufacturing overhead spending and production-volume variances. Use the colum-nar presentation illustrated in Exhibit 8-4 (page 304).Required What is the amount of the under- or overallocated variable manufacturing overhead and the under- oroverallocated fixed manufacturing overhead? Why are the flexible-budget variance and the under- oroverallocated overhead amount always the same for variable manufacturing overhead but rarely thesame for fixed manufacturing overhead?Suppose the denominator level was 1,700,000 rather than 1,000,000 machine-hours. What variances inrequirement 2 would be affected? Recompute them.3.4.

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Description: Graphs and overhead variances. Best Around, Inc., is a manufacturer of vacuums and uses standard costing. Manufacturing overhead (both variable and fixed) is allocated to products on the basis of budgeted machine-hours. In 2017, budgeted fixed manufa

1.Given,Budgeted fixed manufacturing overhead cost is $17,000,000.Budgeted variable manufacturing…

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Graphs and overhead variances. Best Around, Inc., is a manufacturer of vacuums and uses standard costing. Manufacturing overhead (both variable and fixed) is allocated to products on the basis of budgeted machine-hours. In 2017, budgeted fixed manufacturing overhead cost was $17,000,000. Budgeted variable manufacturing overhead was $10 per machine-hour. The denominator level was 1,000,000 machine-hours.

1. Prepare a graph for fixed manufacturing overhead. The graph should display how Best Around, Inc.'s
fixed manufacturing overhead costs will be depicted for the purposes of (a) planning and control and
(b) inventory costing.
2. Suppose that 1,125,000 machine-hours were allowed for actual output produced in 2017, but 1,200,000
actual machine-hours were used. Actual manufacturing overhead was $12,075,000, variable, and
$17,100,000, fixed. Compute (a) the variable manufacturing overhead spending and efficiency variances
and (b) the fixed manufacturing overhead spending and production-volume variances. Use the colum-
nar presentation illustrated in Exhibit 8-4 (page 304).
Required

What is the amount of the under- or overallocated variable manufacturing overhead and the under- or
overallocated fixed manufacturing overhead? Why are the flexible-budget variance and the under- or
overallocated overhead amount always the same for variable manufacturing overhead but rarely the
same for fixed manufacturing overhead?
Suppose the denominator level was 1,700,000 rather than 1,000,000 machine-hours. What variances in
requirement 2 would be affected? Recompute them.
3.
4.

Definition Definition System of assigning an estimated cost to the product (instead of the actual cost) so that the product cost can be determined well in advance and the pricing of the product can be done on time. Since the actual cost cannot be predicted at the initial stage of the production process, the estimated cost is recorded in the books. Any deviation of the estimated cost of the actual cost is adjusted in the books at the end of the period.

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