Baehr Company is a manufacturing company with a fiscal year that runs from July 1 to June 30. The company uses a job-order accounting system for its production costs. A predetermined overhead rate based upon direct labor hours is used to apply overhead to individual jobs. A flexible budget of overhead costs was prepared for the fiscal year as shown below. Direct labor hours 100,000 120,000 140,000 Variable overhead costs $325,000 $390,000 $455,000 Fixed overhead costs 216,000 216,000 216,000 Total overhead $541,000 $606,000 $671,000 Although the annual ideal capacity is 150,000 direct labor hours, company officials have determined 120,000 direct labor hours to be normal capacity for the year. The information presented below is for November. Jobs 83-50 and 83-51 were completed during November. Inventories November 1: Raw materials and supplies $ 10,500 Work-in-process (Job 83-50) 54,000 Finished goods 112,500 Purchases of raw materials and supplies: Raw materials $135,000 Supplies 15,000 $150,000 Materials and supplies requisitioned for production: Job 83-50 $ 45,000 Job 83-51 37,500 Job 83-52 25,500 Supplies 12,000 $120,000 Factory direct labor hours: Job 83-50 3,500 Job 83-51 3,000 Job 83-52 2,000 8,500 Labor costs for people working in the factory: Direct labor wages $51,000 Indirect labor wages (4,000 hours) 15,000 Plant manager salary 6,000 $72,000 Building occupancy costs (heat, light, depreciation, etc.): Factory facilities $6,500 Sales offices 1,500 Administrative offices 1,000 $9,000 Factory equipment costs: Power $4,000 Repairs and maintenance 1,500 Depreciation 1,500 Other 1,000 $8,000
Variance Analysis
In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.
Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
Baehr Company is a manufacturing company with a fiscal year that runs from July 1 to June 30. The company uses a job-order accounting system for its production costs. A predetermined
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Direct labor hours |
100,000 |
120,000 |
140,000 |
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Variable overhead costs |
$325,000 |
$390,000 |
$455,000 |
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Fixed overhead costs |
216,000 |
216,000 |
216,000 |
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Total overhead |
$541,000 |
$606,000 |
$671,000 |
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Although the annual ideal capacity is 150,000 direct labor hours, company officials have determined 120,000 direct labor hours to be normal capacity for the year.
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The information presented below is for November. Jobs 83-50 and 83-51 were completed during November. |
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Actual manufacturing overhead incurred during November was __________?
Assume the predetermined overhead rate is $4.50 per direct labor hour. The total cost of Job 83-50 is __________ ?
Assume Baehr’s predetermined overhead rate is $4.50 per direct labor hour. The total amount of overhead applied to jobs during November was _____________?
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