Warner Manufacturing has established the following master flexible budget for the current year: Production in Units Variable expenses: Raw materials 80,000 $152,000 Directlabour 160,000 Manufacturing overhead 120,000 Total variable expenses $432,000 Fixed expenses: Manufacturing overhead $300,000 Sellingand administrative 191,000 Total fixed expenses $491,000 Total expenses $923,000 100,000 120,000 190,000 228,000 200,000 240,000 150,000 180,000 $540,000 $648,000 $300,000 $300,000 191,000 191,000 $491,000 $491,000 $1,031,000 $1,139,000 Manufacturing overhead is applied on the basis of machine hours. At standard, each unit of product requires one machine hour to complete. Required: a) The denominator activity level is 100,000 units. What are the predetermined variable and fixed manufacturing overhead rates? b) Actual data for the year were as follows: Actual variable manufacturing overhead cost $159,500 Actual fixed manufacturing overhead cost $306,000 Actual machine hours incurred 110,000 Units produced 100,000 Compute the variable overhead spending and efficiency variances and the fixed overhead budget and volume variances for the year.
Warner Manufacturing has established the following master flexible budget for the current year: Production in Units Variable expenses: Raw materials 80,000 $152,000 Directlabour 160,000 Manufacturing overhead 120,000 Total variable expenses $432,000 Fixed expenses: Manufacturing overhead $300,000 Sellingand administrative 191,000 Total fixed expenses $491,000 Total expenses $923,000 100,000 120,000 190,000 228,000 200,000 240,000 150,000 180,000 $540,000 $648,000 $300,000 $300,000 191,000 191,000 $491,000 $491,000 $1,031,000 $1,139,000 Manufacturing overhead is applied on the basis of machine hours. At standard, each unit of product requires one machine hour to complete. Required: a) The denominator activity level is 100,000 units. What are the predetermined variable and fixed manufacturing overhead rates? b) Actual data for the year were as follows: Actual variable manufacturing overhead cost $159,500 Actual fixed manufacturing overhead cost $306,000 Actual machine hours incurred 110,000 Units produced 100,000 Compute the variable overhead spending and efficiency variances and the fixed overhead budget and volume variances for the year.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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.
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Transcribed Image Text:Warner Manufacturing has established the following master flexible budget for the current year:
Production in Units
Variable expenses:
80,000
Raw materials
$152,000
Directlabour
160,000
Manufacturing overhead 120,000
Total variable expenses
$432,000
Fixed expenses:
Manufacturing overhead $300,000
Sellingand administrative
191,000
Total fixed expenses
$491,000
Total expenses
$923,000
100,000
120,000
190,000 228,000
200,000 240,000
150,000
180,000
$540,000 $648,000
$300,000
$300,000
191,000
191,000
$491,000
$491,000
$1,031,000 $1,139,000
Manufacturing overhead is applied on the basis of machine hours. At standard, each unit of product
requires one machine hour to complete. Required:
a) The denominator activity level is 100,000 units. What are the predetermined variable and fixed
manufacturing overhead rates?
b) Actual data for the year were as follows: Actual variable manufacturing overhead cost $159,500 Actual
fixed manufacturing overhead cost $306,000 Actual machine hours incurred 110,000 Units produced
100,000 Compute the variable overhead spending and efficiency variances and the fixed overhead
budget and volume variances for the year.
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