Prepare a Flexible budget for overheads on the basis of the following data. Ascertain the overhead rates at 50% and 60% capacity. Variable overheads: At 60% capacity Indirect Material 6,000 Labour 18,000 Semi-variable overheads: Electricity: (40% Fixed & 60% variable) 30,000 Repairs: (80% fixed & 20% Variable) 3,000 Fixed overheads: Depreciation 16,500 Insurance 4,500 Salaries 15,000 Total overheads 93,000 Estimated direct labour hours 1,86,000

Prepare a Flexible budget for overheads on the basis of the following data. Ascertain the overhead rates at 50% and 60% capacity. Variable overheads: At 60% capacity Indirect Material 6,000 Labour 18,000 Semi-variable overheads: Electricity: (40% Fixed & 60% variable) 30,000 Repairs: (80% fixed & 20% Variable) 3,000 Fixed overheads: Depreciation 16,500 Insurance 4,500 Salaries 15,000 Total overheads 93,000 Estimated direct labour hours 1,86,000

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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Required information Use the following information for the Exercises below. (Algo) [The following information applies to the questions displayed below.] Manuel Company predicts it will operate at 80% of its productive capacity. Its overhead allocation base is DLH and its standard amount per allocation base is 0.5 DLH per unit. The company reports the following for this period. Production (in units) Overhead Variable overhead Fixed overhead Total overhead Flexible Budget at 80% Capacity 53,750 1. Standard overhead rate 2. Standard overhead applied 3. Overhead variance $ 295,625 53,750 $ 349,375 Actual Results 50,000 $ 354,500 Exercise 21-17 (Algo) Computing standard overhead rate and total overhead variance LO P4 1. Compute the standard overhead rate. Hint: Standard allocation base at 80% capacity is 26,875 DLH, computed as 53,750 units x 0.5 DLH per unit. 2. Compute the standard overhead applied. 3. Compute the total overhead variance. (Indicate the effect of the variance by selecting…
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