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The condensed form of Nordstrop Company's flexible budget for manufacturing overhead follows: Cost Formula Overhead Costs Variable cost Fixed cost Total overhead cost (per machine-hour) 6,500 $ Machine-Hours Number of units produced 3,550 Actual machine-hours. 7,000 Actual variable overhead costs $ 8,960- Actual fixed overhead costs $ 12,000 1.25 The following information is available for a recent period: 1. The denominator activity of 6,500 machine-hours was chosen to compute the predetermined overhead rate. 2. At the 6,500 standard machine-hours level of activity, the company should produce 3,250 units of product. 3. The company's actual operating results were as follows: Variable rate Fixed rate Predetermined overhead rate 7,500 8,500 $ Required: 1. Compute the predetermined overhead rate and break it down into variable and fixed cost elements. (Round your answers to 2 decimal places.) 8,125 $ 9,375 $10,625 11,700 11,700 11,700 $ 19,825 $21,075 $22,325 Variable overhead spending variance Variable overhead efficiency variance Fixed overhead budget variance Fixed overhead volume variance per MH per MH per MH 2. What were the standard hours allowed for the year's actual output? (Do not round intermediate calculations.) 3. Compute the variable overhead spending and efficiency variances and the fixed overhead budget and volume variances. (Do not round intermediate calculations. Round your answers to 2 decimal places. Indicate the effect of each variance by selecting "F" for favourable, "U" for unfavourable, and "None" for no effect (i.e., zero variance).)

The condensed form of Nordstrop Company's flexible budget for manufacturing overhead follows: Cost Formula Overhead Costs Variable cost Fixed cost Total overhead cost (per machine-hour) 6,500 $ Machine-Hours Number of units produced 3,550 Actual machine-hours. 7,000 Actual variable overhead costs $ 8,960- Actual fixed overhead costs $ 12,000 1.25 The following information is available for a recent period: 1. The denominator activity of 6,500 machine-hours was chosen to compute the predetermined overhead rate. 2. At the 6,500 standard machine-hours level of activity, the company should produce 3,250 units of product. 3. The company's actual operating results were as follows: Variable rate Fixed rate Predetermined overhead rate 7,500 8,500 $ Required: 1. Compute the predetermined overhead rate and break it down into variable and fixed cost elements. (Round your answers to 2 decimal places.) 8,125 $ 9,375 $10,625 11,700 11,700 11,700 $ 19,825 $21,075 $22,325 Variable overhead spending variance Variable overhead efficiency variance Fixed overhead budget variance Fixed overhead volume variance per MH per MH per MH 2. What were the standard hours allowed for the year's actual output? (Do not round intermediate calculations.) 3. Compute the variable overhead spending and efficiency variances and the fixed overhead budget and volume variances. (Do not round intermediate calculations. Round your answers to 2 decimal places. Indicate the effect of each variance by selecting "F" for favourable, "U" for unfavourable, and "None" for no effect (i.e., zero variance).)

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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The condensed form of Nordstrop Company's flexible budget for manufacturing overhead follows: Cost Formula Overhead Costs Variable cost Fixed cost Total overhead cost (per machine-hour) 6,500 $ Machine-Hours 1.25 Number of units produced 3,550 Actual machine-hours. 7,000 Actual variable overhead costs $ 8,960 Actual fixed overhead costs $ 12,000 Variable rate Fixed rate Predetermined overhead rate 7,500 8,500 $ $ The following information is available for a recent period: 1. The denominator activity of 6,500 machine-hours was chosen to compute the predetermined overhead rate. 2. At the 6,500 standard machine-hours level of activity, the company should produce 3,250 units of product. 3. The company's actual operating results were as follows: 8,125 $ 9,375 $ 10,625 11,700 19,825 $ 21,075 $22,325 Variable overhead spending variance Variable overhead efficiency variance Fixed overhead budget variance Fixed overhead volume variance 11,700 Required: 1. Compute the predetermined overhead rate and break it down into variable and fixed cost elements. (Round your answers to 2 decimal places.) 11,700 per MH per MH per MH 2. What were the standard hours allowed for the year's actual output? (Do not round intermediate calculations.) 3. Compute the variable overhead spending and efficiency variances and the fixed overhead budget and volume variances. (Do not round intermediate calculations. Round your answers to 2 decimal places. Indicate the effect of each variance by selecting "F" for favourable, "U" for unfavourable, and "None" for no effect (i.e., zero variance).)
Transcribed Image Text:The condensed form of Nordstrop Company's flexible budget for manufacturing overhead follows: Cost Formula Overhead Costs Variable cost Fixed cost Total overhead cost (per machine-hour) 6,500 $ Machine-Hours 1.25 Number of units produced 3,550 Actual machine-hours. 7,000 Actual variable overhead costs $ 8,960 Actual fixed overhead costs $ 12,000 Variable rate Fixed rate Predetermined overhead rate 7,500 8,500 $ $ The following information is available for a recent period: 1. The denominator activity of 6,500 machine-hours was chosen to compute the predetermined overhead rate. 2. At the 6,500 standard machine-hours level of activity, the company should produce 3,250 units of product. 3. The company's actual operating results were as follows: 8,125 $ 9,375 $ 10,625 11,700 19,825 $ 21,075 $22,325 Variable overhead spending variance Variable overhead efficiency variance Fixed overhead budget variance Fixed overhead volume variance 11,700 Required: 1. Compute the predetermined overhead rate and break it down into variable and fixed cost elements. (Round your answers to 2 decimal places.) 11,700 per MH per MH per MH 2. What were the standard hours allowed for the year's actual output? (Do not round intermediate calculations.) 3. Compute the variable overhead spending and efficiency variances and the fixed overhead budget and volume variances. (Do not round intermediate calculations. Round your answers to 2 decimal places. Indicate the effect of each variance by selecting "F" for favourable, "U" for unfavourable, and "None" for no effect (i.e., zero variance).)
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