Standard Costs for Overheads and Overhead VariancesVirtual Pet Company makes two products- The Virtual Parakeet and the Virtual Slug. The Company had thefollowing budget for 20X6:units to be produced and solddirect material costs per unitdirect labor costs per unitmachine hours per unitOverhead Budgetfixed overhead:variable overheadParakeets2,000,000$1.50$0.45.20Calculate:$4,500,000Slugs1,000,000$5/machine-hourThe company uses a standard costing system and allocates overhead based on standard machine hoursallowed.$1.05$0.25.10Suppose at the end of the year the firm determined that actual fixed overhead incurred amounted to$4,400,000 and actual total variable overhead incurred amounted to $2,300,000.Also, suppose that the firm actually used 470,000 machine hours in the production and sales of1,500,000 units of Virtual Parakeets and 1,500,000 units of Virtual Slugs.1. the standard (absorption) cost of a virtual parakeet2. the fixed overhead spending variance3. the production volume variance4. the overhead efficiency variance5. the variable overhead spending variance6. the total under or over allocated overheadFor UFor UF or UFor UOver Under7. Assume the firm has separate accounts for Fixed Manufacturing Overhead Control,Variable Manufacturing Overhead Control, Fixed Manufacturing Overhead Allocated andVariable Manufacturing Overhead Allocated. Give the journal entry that records all theoverhead variances and closes all the overhead accounts.

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Virtual Pet Company makes two products- The Virtual Parakeet and the Virtual Slug. The Company had the following budget for 20X6: units to be produced and sold direct material costs per unit direct labor costs per unit machine hours per unit Overhead Budget fixed overhead: variable overhead Parakeets 2,000,000 $1.50 $0.45 .20 $4,500,000 Slugs 1,000,000 $1.05 $0.25 .10 $5/machine-hour The company uses a standard costing system and allocates overhead based on standard machine hours allowed.

Virtual Pet Company makes two products- The Virtual Parakeet and the Virtual Slug. The Company had the following budget for 20X6: units to be produced and sold direct material costs per unit direct labor costs per unit machine hours per unit Overhead Budget fixed overhead: variable overhead Parakeets 2,000,000 $1.50 $0.45 .20 $4,500,000 Slugs 1,000,000 $1.05 $0.25 .10 $5/machine-hour The company uses a standard costing system and allocates overhead based on standard machine hours allowed.

FINANCIAL ACCOUNTING

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ISBN:9781259964947

Author:Libby

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Chapter1: Financial Statements And Business Decisions

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Concept explainers

Master Budget

A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.

Sales Budget and Selling

A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.

Question

Standard Costs for Overheads and Overhead Variances
Virtual Pet Company makes two products- The Virtual Parakeet and the Virtual Slug. The Company had the
following budget for 20X6:
units to be produced and sold
direct material costs per unit
direct labor costs per unit
machine hours per unit
Overhead Budget
fixed overhead:
variable overhead
Parakeets
2,000,000
$1.50
$0.45
.20
Calculate:
$4,500,000
Slugs
1,000,000
$5/machine-hour
The company uses a standard costing system and allocates overhead based on standard machine hours
allowed.
$1.05
$0.25
.10
Suppose at the end of the year the firm determined that actual fixed overhead incurred amounted to
$4,400,000 and actual total variable overhead incurred amounted to $2,300,000.
Also, suppose that the firm actually used 470,000 machine hours in the production and sales of
1,500,000 units of Virtual Parakeets and 1,500,000 units of Virtual Slugs.
1. the standard (absorption) cost of a virtual parakeet
2. the fixed overhead spending variance
3. the production volume variance
4. the overhead efficiency variance
5. the variable overhead spending variance
6. the total under or over allocated overhead
For U
For U
F or U
For U
Over Under
7. Assume the firm has separate accounts for Fixed Manufacturing Overhead Control,
Variable Manufacturing Overhead Control, Fixed Manufacturing Overhead Allocated and
Variable Manufacturing Overhead Allocated. Give the journal entry that records all the
overhead variances and closes all the overhead accounts.

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