Extrim Company produces monitors. Extrim’s plant in San Antonio uses a standard costing system. The standard costing system relies on direct labor hours to assign overhead costs to production. The direct labor standard indicates that 4 direct labor hours should be used for every monitor produced. (The San Antonio plant produces only one model.) The normal production volume is 120,000 units. The budgeted overhead for the coming year is as follows: FOH $1,286,400 VOH 888,000* *At normal volume. Extrim applies overhead on the basis of direct labor hours. During the year, Extrim produced 119,000 units, worked 487,900 direct labor hours, and incurred actual fixed overhead costs of $1.3 million and actual variable overhead costs of $927,010. Required: 1. Calculate the standard fixed overhead rate and the standard variable overhead rate. Standard fixed overhead rate $fill in the blank 1 per direct labor hour Standard variable overhead rate $fill in the blank 2 per direct labor hour 2. Compute the applied fixed overhead and the applied variable overhead. What is the total fixed overhead variance? Total variable overhead variance? Enter variance amounts as positive numbers and select Overapplied or Underapplied. Applied fixed overhead $fill in the blank 3 Applied variable overhead $fill in the blank 4 Total fixed overhead variance $fill in the blank 5 Total variable overhead variance $fill in the blank 7 3. CONCEPTUAL CONNECTION Break down the total fixed overhead variance into a spending variance and a volume variance. Enter amounts as positive numbers and select Favorable or Unfavorable. Spending variance $fill in the blank 9 Volume variance $fill in the blank 11 4. CONCEPTUAL CONNECTION Compute the variable overhead spending and efficiency variances. Enter amounts as positive numbers and select Favorable or Unfavorable. Spending variance $fill in the blank 13 Efficiency variance $fill in the blank 15
Master Budget
A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.
Sales Budget and Selling
A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.
Extrim Company produces monitors. Extrim’s plant in San Antonio uses a
| FOH | $1,286,400 |
| VOH | 888,000* |
*At normal volume.
Extrim applies overhead on the basis of direct labor hours.
During the year, Extrim produced 119,000 units, worked 487,900 direct labor hours, and incurred actual fixed overhead costs of $1.3 million and actual variable overhead costs of $927,010.
Required:
1. Calculate the standard fixed overhead rate and the standard variable overhead rate.
Standard fixed overhead rate $fill in the blank 1 per direct labor hour
Standard variable overhead rate $fill in the blank 2 per direct labor hour
2. Compute the applied fixed overhead and the applied variable overhead. What is the total fixed overhead variance? Total variable overhead variance? Enter variance amounts as positive numbers and select Overapplied or Underapplied.
| Applied fixed overhead | $fill in the blank 3 | ||
| Applied variable overhead | $fill in the blank 4 | ||
| Total fixed overhead variance | $fill in the blank 5 |
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| Total variable overhead variance | $fill in the blank 7 |
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3. CONCEPTUAL CONNECTION Break down the total fixed overhead variance into a spending variance and a volume variance. Enter amounts as positive numbers and select Favorable or Unfavorable.
| Spending variance | $fill in the blank 9 |
|
|
| Volume variance | $fill in the blank 11 |
|
4. CONCEPTUAL CONNECTION Compute the variable overhead spending and efficiency variances. Enter amounts as positive numbers and select Favorable or Unfavorable.
| Spending variance | $fill in the blank 13 |
|
|
| Efficiency variance | $fill in the blank 15 |
|
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