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
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.
![1. Compute the total variable overhead variance and identify it as favorable or unfavorable. (Indicate the effect of the variance by
selecting 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 by
selecting favorable, unfavorable, or no variance.)
-At 55% of Operating Capacity-
Predetermined
OH Rate
Standard DL
Hours
Overhead Costs
Favorable/Unfavorable
Applied
Actual Results
Variance
Variable overhead applied
260
Favorable
Fixed overhead applied
1.20
Unfavorable
Unfavorable
Total overhead variance
24
3.80](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F1bcb22fa-f91f-4e0d-8193-1cb3b9ae0f86%2F937bf122-04c4-4fbc-84b7-c02e5f04f25e%2Fcgrijfl_processed.jpeg&w=3840&q=75)
![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
$ 78.00
94.00
52.00
24.00
$ 248.00
The $3.80 ($2.60 + $1.20) total overhead rate per direct labor hour (DLH) is based on a predicted activity level of 36,600
units, which is 60% of the factory's capacity of 61,000 units per month. The following monthly flexible budget information is
avallable.
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
878,400
$ 2,781,600
$ 2,061,800
878, 400
$ 2,940, 200
During the current month, the company operated at 55% of capacity, direct labor of 652,000 hours were used, and the
following actual overhead costs were incurred.
Actual variable overhead
Actual fixed overhead
Actual total overhead
$ 1,714,000
918,000
$ 2,632,000](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F1bcb22fa-f91f-4e0d-8193-1cb3b9ae0f86%2F937bf122-04c4-4fbc-84b7-c02e5f04f25e%2F3bxu5p8_processed.jpeg&w=3840&q=75)
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