Required information [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% Actual Capacity 53,500 $ 294,250 53,500 $ 347,750 Results 49,600 $ 351,200
Required information [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% Actual Capacity 53,500 $ 294,250 53,500 $ 347,750 Results 49,600 $ 351,200
Chapter1: Financial Statements And Business Decisions
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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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![Required information
[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%
Actual
Capacity
53,500
$ 294,250
53,500
$ 347,750
Results
49,600
$ 351,200
1. Compute the standard overhead rate. Hint Standard allocation base at 80% capacity is 26,750 DLH, computed as 53,500 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 favorable, unfavorable, or no variance.)
1. Standard overhead rate
2. Standard overhead applied
3. Overhead variance
Unfavorable](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F172c84e0-8020-48b3-b2f3-f008cb2f3ed9%2Fe39f329b-ae26-49c7-bc53-a86c7eba6724%2Fv1m0lpn_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Required information
[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%
Actual
Capacity
53,500
$ 294,250
53,500
$ 347,750
Results
49,600
$ 351,200
1. Compute the standard overhead rate. Hint Standard allocation base at 80% capacity is 26,750 DLH, computed as 53,500 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 favorable, unfavorable, or no variance.)
1. Standard overhead rate
2. Standard overhead applied
3. Overhead variance
Unfavorable
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