Norwall Company's budgeted variable manufacturing overhead cost is $1.05 per machine-hour and its budgeted fixed manufacturing overhead is $27,094 per month. The following information is available for a recent month: a. The denominator activity of 8,740 machine-hours is used to compute the predetermined overhead rate. b. At a denominator activity of 8,740 machine-hours, the company should produce 3,800 units of product. c. The company's actual operating results were: Number of units produced Actual machine-hours Actual variable manufacturing overhead cost Actual fixed manufacturing overhead cost 4,220 10,050 Required: 1. Compute the predetermined overhead rate and break it down into variable and fixed cost elements. Note: Round your answers to 2 decimal places. 1. Predetermined overhead rate 1. Variable element 1. Fixed element 2. Standard hours allowed for the actual production 3. Variable overhead rate variance $ 12,060.00 $ 26,400.00 2. Compute the standard hours allowed for the actual production. 3. Compute the variable overhead rate and efficiency variances and the fixed overhead budget and volume variances. Note: Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values. Round your intermediate calculations and final answers to 2 decimal places. 3. Variable overhead efficiency variance 3. Fixed overhead budget variance 3. Fixed overhead volume variance per MH per MH per MH MHs
Norwall Company's budgeted variable manufacturing overhead cost is $1.05 per machine-hour and its budgeted fixed manufacturing overhead is $27,094 per month. The following information is available for a recent month: a. The denominator activity of 8,740 machine-hours is used to compute the predetermined overhead rate. b. At a denominator activity of 8,740 machine-hours, the company should produce 3,800 units of product. c. The company's actual operating results were: Number of units produced Actual machine-hours Actual variable manufacturing overhead cost Actual fixed manufacturing overhead cost 4,220 10,050 Required: 1. Compute the predetermined overhead rate and break it down into variable and fixed cost elements. Note: Round your answers to 2 decimal places. 1. Predetermined overhead rate 1. Variable element 1. Fixed element 2. Standard hours allowed for the actual production 3. Variable overhead rate variance $ 12,060.00 $ 26,400.00 2. Compute the standard hours allowed for the actual production. 3. Compute the variable overhead rate and efficiency variances and the fixed overhead budget and volume variances. Note: Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values. Round your intermediate calculations and final answers to 2 decimal places. 3. Variable overhead efficiency variance 3. Fixed overhead budget variance 3. Fixed overhead volume variance per MH per MH per MH MHs
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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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.
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Transcribed Image Text:Norwall Company's budgeted variable manufacturing overhead cost is $1.05 per machine-hour and its budgeted fixed manufacturing
overhead is $27,094 per month.
The following information is available for a recent month:
a. The denominator activity of 8,740 machine-hours is used to compute the predetermined overhead rate.
b. At a denominator activity of 8,740 machine-hours, the company should produce 3,800 units of product.
c. The company's actual operating results were:
Number of units produced
Actual machine-hours
Actual variable manufacturing overhead cost
Actual fixed manufacturing overhead cost
Required:
1. Compute the predetermined overhead rate and break it down into variable and fixed cost elements.
Note: Round your answers to 2 decimal places.
1. Predetermined overhead rate
1. Variable element
4,220
10,050
2. Compute the standard hours allowed for the actual production.
3. Compute the variable overhead rate and efficiency variances and the fixed overhead budget and volume variances.
Note: Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zer
variance). Input all amounts as positive values. Round your intermediate calculations and final answers to 2 decimal places.
1. Fixed element
2. Standard hours allowed for the actual production
3. Variable overhead rate variance
$ 12,060.00
$ 26,400.00
3. Variable overhead efficiency variance
3. Fixed overhead budget variance
3. Fixed overhead volume variance
per MH
per MH
per MH
MHs
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