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For May, Mariana company planned production of 14,400 units (80% of its production capacity of 18,000 units) and prepared the following overhead budget. The company applies overhead with a standard of 3 DLH per unit and a standard overhead rate of $3.79 per DLH. 80% Operating Level 14,400 Overhead Budget Production (in units) Budgeted overhead Variable overhead costs Indirect materials Indirect labor Power 10,800 3,888 Total variable overhead costs 83,808 Fixed overhead costs Rent of building Depreciation-Machinery Maintenance Supervisory salaries Total fixed overhead costs Total overhead $ 25,920 43,200 Power Maintenance 27,000 18,000 34,920 79,920 $ 163,728 It actually operated at 90% capacity (16,200 units) in May and incurred the following actual overhead. Actual Overhead Costs Indirect materials Indirect labor $ 25,920 46,500 12,150 8,800 Rent of building 27,000 Depreciation Machinery 18,000 Supervisory salaries 38,000 Actual total overhead $ 176,370 1. Compute the overhead controllable variance and identify it as favorable or unfavorable. 2. Compute the overhead volume variance and identify it as favorable or unfavorable. 3. Prepare an overhead variance report at the actual activity level of 16,200 unit

For May, Mariana company planned production of 14,400 units (80% of its production capacity of 18,000 units) and prepared the following overhead budget. The company applies overhead with a standard of 3 DLH per unit and a standard overhead rate of $3.79 per DLH. 80% Operating Level 14,400 Overhead Budget Production (in units) Budgeted overhead Variable overhead costs Indirect materials Indirect labor Power 10,800 3,888 Total variable overhead costs 83,808 Fixed overhead costs Rent of building Depreciation-Machinery Maintenance Supervisory salaries Total fixed overhead costs Total overhead $ 25,920 43,200 Power Maintenance 27,000 18,000 34,920 79,920 $ 163,728 It actually operated at 90% capacity (16,200 units) in May and incurred the following actual overhead. Actual Overhead Costs Indirect materials Indirect labor $ 25,920 46,500 12,150 8,800 Rent of building 27,000 Depreciation Machinery 18,000 Supervisory salaries 38,000 Actual total overhead $ 176,370 1. Compute the overhead controllable variance and identify it as favorable or unfavorable. 2. Compute the overhead volume variance and identify it as favorable or unfavorable. 3. Prepare an overhead variance report at the actual activity level of 16,200 unit

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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For May, Mariana company planned production of 14,400 units (80% of its production capacity of 18,000 units) and prepared the following overhead budget. The company applies overhead with a standard of 3 DLH per unit and a standard overhead rate of $3.79 per DLH. 80% Operating Level 14,400 Overhead Budget Production (in units) Budgeted overhead Variable overhead costs Indirect materials Indirect labor Power Maintenance $ 25,920 43,200 3,888 Total variable overhead costs 83,808 Fixed overhead costs Rent of building 27,000 Depreciation Machinery 18,000 Supervisory salaries 34,920 Total fixed overhead costs 79,920 Total overhead Indirect materials Indirect labor 10,800 $ 163,728 It actually operated at 90% capacity (16,200 units) in May and incurred the following actual overhead. Actual Overhead Costs $ 25,920 46,500 12,150 8,800 Rent of building 27,000 Depreciation Machinery 18,000 Supervisory salaries 38,000 Actual total overhead $ 176,370 Power Maintenance 1. Compute the overhead controllable variance and identify it as favorable or unfavorable. 2. Compute the overhead volume variance and identify it as favorable or unfavorable. 3. Prepare an overhead variance report at the actual activity level of 16,200 unit
Transcribed Image Text:For May, Mariana company planned production of 14,400 units (80% of its production capacity of 18,000 units) and prepared the following overhead budget. The company applies overhead with a standard of 3 DLH per unit and a standard overhead rate of $3.79 per DLH. 80% Operating Level 14,400 Overhead Budget Production (in units) Budgeted overhead Variable overhead costs Indirect materials Indirect labor Power Maintenance $ 25,920 43,200 3,888 Total variable overhead costs 83,808 Fixed overhead costs Rent of building 27,000 Depreciation Machinery 18,000 Supervisory salaries 34,920 Total fixed overhead costs 79,920 Total overhead Indirect materials Indirect labor 10,800 $ 163,728 It actually operated at 90% capacity (16,200 units) in May and incurred the following actual overhead. Actual Overhead Costs $ 25,920 46,500 12,150 8,800 Rent of building 27,000 Depreciation Machinery 18,000 Supervisory salaries 38,000 Actual total overhead $ 176,370 Power Maintenance 1. Compute the overhead controllable variance and identify it as favorable or unfavorable. 2. Compute the overhead volume variance and identify it as favorable or unfavorable. 3. Prepare an overhead variance report at the actual activity level of 16,200 unit
Required 1 Required 2 Required 3 Compute the overhead controllable variance and identify it as favorable or unfavorable. Note: Indicate the effect of the variance by selecting favorable, unfavorable, or no variance. Controllable variance Actual total overhead Budgeted (flexible) overhead Fixed overhead Variable overhead Controllable variance. Show Transcribed Text Volume variance Required 1 Required 2 Required 3 Compute the overhead volume variance and identify it as favorable or unfavorable. Note: Indicate the effect of the variance by selecting favorable, unfavorable, or no variance. Do not round intermed calculations. Show Transcribed Text Required 1 Required 2 Expected Actual Controllable Variance Variable overhead costs: Fixed overhead costs: 1- Total overhead costs Volume Variance Volume Variance Volume variance Total overhead variance < Required 1 Required 3 Prepare an overhead variance report at the actual activity level of 16,200 units. Note: Indicate the effect of each variance by selecting favorable, unfavorable, or no variance. Do not round interm calculations. < Required 1 Required 2 > MARIANA COMPANY Overhead Variance Report For Month Ended May 31 Flexible Budget Actual Results Required 3 > Variances Favorable/Unfavorable
Transcribed Image Text:Required 1 Required 2 Required 3 Compute the overhead controllable variance and identify it as favorable or unfavorable. Note: Indicate the effect of the variance by selecting favorable, unfavorable, or no variance. Controllable variance Actual total overhead Budgeted (flexible) overhead Fixed overhead Variable overhead Controllable variance. Show Transcribed Text Volume variance Required 1 Required 2 Required 3 Compute the overhead volume variance and identify it as favorable or unfavorable. Note: Indicate the effect of the variance by selecting favorable, unfavorable, or no variance. Do not round intermed calculations. Show Transcribed Text Required 1 Required 2 Expected Actual Controllable Variance Variable overhead costs: Fixed overhead costs: 1- Total overhead costs Volume Variance Volume Variance Volume variance Total overhead variance < Required 1 Required 3 Prepare an overhead variance report at the actual activity level of 16,200 units. Note: Indicate the effect of each variance by selecting favorable, unfavorable, or no variance. Do not round interm calculations. < Required 1 Required 2 > MARIANA COMPANY Overhead Variance Report For Month Ended May 31 Flexible Budget Actual Results Required 3 > Variances Favorable/Unfavorable
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