1. Compute the total variable overhead variance and identify it as favorable or unfavorable. (Indicate the effect of the variance byselecting favorable, unfavorable, or no variance.)2. Compute the total fixed overhead varlance and identify It as favorable or unfavorable. (Indicate the effect of the variance byselecting favorable, unfavorable, or no variance.)-At 55% of Operating Capacity-PredeterminedOH RateStandard DLHoursOverhead CostsFavorable/UnfavorableAppliedActual ResultsVarianceVariable overhead applied260FavorableFixed overhead applied1.20UnfavorableUnfavorableTotal overhead variance243.80 Direct material (30 pounds @ $2.60 per pound)Direct labor (20 hours @ $4,70 per DLH)Variable overhead (20 hours e $2.60 per DLH)Fixed overhead (20 hours @ $1.20 per DLH)Standard cost per unit$ 78.0094.0052.0024.00$ 248.00The $3.80 ($2.60 + $1.20) total overhead rate per direct labor hour (DLH) is based on a predicted activity level of 36,600units, which is 60% of the factory's capacity of 61,000 units per month. The following monthly flexible budget information isavallable.Operating Levels (X of capacity)55%33,550671,000Flexible BudgetBudgeted production (units)Budgeted direct labor (standard hours)Budgeted averheadVariable overheadFixed overheadTotal overhead60%36,600732,00065%39,650793,000$ 1,744,600878,400$ 2,623,000$ 1,903, 200878,400$ 2,781,600$ 2,061,800878, 400$ 2,940, 200During the current month, the company operated at 55% of capacity, direct labor of 652,000 hours were used, and thefollowing actual overhead costs were incurred.Actual variable overheadActual fixed overheadActual total overhead$ 1,714,000918,000$ 2,632,000

Solution 1 and 2: At 55% of operating capacity Particulars Predetermined overhead rate…

Operating Levels (X of capacity) 55% 33,550 671,000 Flexible Budget Budgeted production (units) Budgeted direct labor (standard hours) Budgeted averhead Variable overhead Fixed overhead Total overhead 60% 36,600 732,000 65% 39,650 793,000 $ 1,744,600 878,400 $ 2,623,000 $ 1,903, 200 $ 2,061,800 878, 400 $2,940,200 878, 400 $ 2,781,600 During the current month, the company operated at 55% of capacity, direct labor of 652,000 hours were used following actual overhead costs were incurred. Actual variable overhead Actual fixed overhead $1,714,000 918,000

Operating Levels (X of capacity) 55% 33,550 671,000 Flexible Budget Budgeted production (units) Budgeted direct labor (standard hours) Budgeted averhead Variable overhead Fixed overhead Total overhead 60% 36,600 732,000 65% 39,650 793,000 $ 1,744,600 878,400 $ 2,623,000 $ 1,903, 200 $ 2,061,800 878, 400 $2,940,200 878, 400 $ 2,781,600 During the current month, the company operated at 55% of capacity, direct labor of 652,000 hours were used following actual overhead costs were incurred. Actual variable overhead Actual fixed overhead $1,714,000 918,000

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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