Magnetic Company has made the following information available for its production facility for the current month. Fixed overhead was estimated at 19,000 machine hours for the production cycle. Actual machine hours for the period were 18,900, which generated 3,900 units. Material purchased (80,000 pieces) P314,000 Material quantity variance P6,400 U Machine hours used (18,900 hours) VOH spending variance P50 U Actual fixed overhead P60,000
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.
Magnetic Company has made the following information available for its production facility for the current month. Fixed
Material purchased (80,000 pieces) |
P314,000 |
|
Material quantity variance |
P6,400 |
U |
Machine hours used (18,900 hours) |
|
|
VOH spending variance |
P50 |
U |
Actual fixed overhead |
P60,000 |
|
Actual labor cost |
P40,120 |
|
Actual labor hours |
5,900 |
|
Magnetic Company’s
Direct material |
20 pieces @ P4 per piece |
Direct labor |
1.5 hours @ P6 per hour |
Variable overhead |
|
(applied on a machine hour basis) |
4.8 hours @ P2.50 per hour |
Fixed overhead |
|
(applied on a machine hour basis) |
4.8 hours @ P3 per hour |
Determine the following items:
m. |
applied fixed overhead |
n. |
fixed overhead spending variance |
o. |
volume variance |
p. |
total overhead variance |
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