The condensed form of Nordstrop Company's flexible budget for manufacturing overhead follows: Overhead Costs Variable cost Fixed cost Total overhead cost Number of units produced Actual machine-hours Actual variable overhead Cost Formula (per machine- hour) $1.80 The following information is available for a recent period: The denominator activity of 6,000 machine-hours was chosen to compute the predetermined overhead rate. At the 6,000 standard machine-hours level of activity, the company should produce 1,200 units of product. The company's actual operating results were as follows: Predetermined overhead rate $11,431 costs Actual fixed overhead costs $19,000 Variable rate Fixed rate 6,000 7,000 8,000 $10,800 $12,600 $14,400 17,400 17,400 17,400 $28,200 $30,000 $31,800 Required: . Compute the predetermined overhead rate and break it down into variable and fixed cost elements. (Round your answers to 2 decimal places.) 1,500 7,100 Variable overhead spending variance Variable overhead efficiency variance Fixed overhead budget variance Fixed overhead volume variance Machine-Hours per MH per MH per MH 2. What were the standard hours allowed for the year's actual output? (Do not round intermediate calculations.) Standard hours for actual production MHS 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: Overhead Costs Variable cost Fixed cost Total overhead cost Number of units produced Actual machine-hours Actual variable overhead Cost Formula (per machine- hour) $1.80 The following information is available for a recent period: The denominator activity of 6,000 machine-hours was chosen to compute the predetermined overhead rate. At the 6,000 standard machine-hours level of activity, the company should produce 1,200 units of product. The company's actual operating results were as follows: Predetermined overhead rate $11,431 costs Actual fixed overhead costs $19,000 Variable rate Fixed rate 6,000 7,000 8,000 $10,800 $12,600 $14,400 17,400 17,400 17,400 $28,200 $30,000 $31,800 Required: . Compute the predetermined overhead rate and break it down into variable and fixed cost elements. (Round your answers to 2 decimal places.) 1,500 7,100 Variable overhead spending variance Variable overhead efficiency variance Fixed overhead budget variance Fixed overhead volume variance Machine-Hours per MH per MH per MH 2. What were the standard hours allowed for the year's actual output? (Do not round intermediate calculations.) Standard hours for actual production MHS 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).)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
A6
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)
$1.80
The following information is available for a recent period:
a. The denominator activity of 6,000 machine-hours was chosen to compute the predetermined overhead rate.
b. At the 6,000 standard machine-hours level of activity, the company should produce 1,200 units of product.
c. The company's actual operating results were as follows:
Number of units produced
Actual machine-hours
Actual variable overhead
costs
$11,431
Actual fixed overhead costs $19,000
Predetermined overhead rate
Variable rate
Fixed rate
Required:
1. Compute the predetermined overhead rate and break it down into variable and fixed cost elements. (Round your
answers to 2 decimal places.)
6,000 7,000
8,000
$10,800 $12, 600 $14,400
17,400 17,400 17,400
$28,200 $30,000 $31,800
Standard hours for actual production
1,500
7,100
Variable overhead spending variance
Variable overhead efficiency variance
Fixed overhead budget variance
Fixed overhead volume variance
Machine-Hours
per
ΜΗ
per
ΜΗ
per
ΜΗ
2. What were the standard hours allowed for the year's actual output? (Do not round intermediate calculations.)
MHS
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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