Overhead information for Cran-Mar Company for October follows: Total factory overhead cost incurred Budgeted fixed factory overhead cost Total standard overhead rate per machine hour (MH) Standard variable factory overhead rate per M Standard MHs allowed for the units manufactured $ 31,400 $ 7,235 $4.96 $ 3.60 5,000 Required: 1. What is the standard fixed factory overhead rate per machine hour (MH)? 2. What is the denominator activity level that was used to establish the fixed factory overhead application rate? 3. Two-way analysis (breakdown) of the total factory overhead cost variance: calculate the following factory overhead cost variances for October and indicate whether each variance is favorable (F) or unfavorable (U). a. Total flexible-budget variance.

Overhead information for Cran-Mar Company for October follows: Total factory overhead cost incurred Budgeted fixed factory overhead cost Total standard overhead rate per machine hour (MH) Standard variable factory overhead rate per M Standard MHs allowed for the units manufactured $ 31,400 $ 7,235 $4.96 $ 3.60 5,000 Required: 1. What is the standard fixed factory overhead rate per machine hour (MH)? 2. What is the denominator activity level that was used to establish the fixed factory overhead application rate? 3. Two-way analysis (breakdown) of the total factory overhead cost variance: calculate the following factory overhead cost variances for October and indicate whether each variance is favorable (F) or unfavorable (U). a. Total flexible-budget variance.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

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Concept explainers

Overheads

In cost accounting, overhead refers to those expenses which occur during the operating of a business. Overhead includes the fixed, variable, or semi-variable which is not directly involved with a company product or service. It is very important to analyze overhead expense as it helps the company in determining how much a company must charge for its products and services so that they can generate profit. Overhead expenses depend upon the nature of the business operations.

Question

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Overhead information for Cran-Mar Company for October follows:
Total factory overhead cost incurred
Budgeted fixed factory overhead cost
Total standard overhead rate per machine hour (MH)
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Standard variable factory overhead rate per MH
Standard MHS allowed for the units manufactured
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Required:
1. What is the standard fixed factory overhead rate per machine hour (MH)?
2. What is the denominator activity level that was used to establish the fixed factory overhead application rate?
3. Two-way analysis (breakdown) of the total factory overhead cost variance: calculate the following factory overhead cost variances
for October and indicate whether each variance is favorable (F) or unfavorable (U).
a. Total flexible-budget variance.
b. Production volume variance.
c. Total overhead cost variance.
4. Calculate the production volume variance and indicate whether the variance is favorable (F) or unfavorable (U).
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The standards for one case of Springfever Tonic are as follows: Direct materials Direct labor Variable overhead (based on direct labor hours) 5.70 pound @ $4.70 per pound = $26.79 4.70 hour @ $11.70 per hour = $54.99 4.70 hour @ $5.70 per hour = $26.79 During the week ended March 13, the following activity took place: 19,500 pound of raw materials were purchased for inventory at a cost of $4.65 per pound. 2,900 cases of finished product were produced. 18,000 pound of raw materials were used. 13,500 direct labor hours were worked at a total cost of $178,200. $75,600 of actual variable overhead costs were incurred. ed: Calculate each of the following variances. Note: Do not round intermediate calculations. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). a. Price variance for raw materials purchased. b. Raw materials usage variance. c. Direct labor rate variance. d. Direct labor efficiency variance.…
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Assume that a company uses a standard cost system and applies overhead to production based on direct labor-hours. It provided the following excerpt from the standard cost card of its only product: Standard Hours 2 hours Fixed manufacturing overhead During the most recent period, the following additional information was available: The total actual fixed overhead cost was $275,000. • The budgeted amount of fixed overhead cost was $285,000. 46,000 direct labor-hours were actually used to produce 24,120 units. How much was the fixed overhead volume variance? Multiple Choice $14,440 U Standard Cost $ 12.00