Managerial Accounting
6th Edition
ISBN: 9781259726972
Author: John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher: McGraw-Hill Education
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Chapter 8, Problem 21E
Exercise 21-21
James Corp. applies overhead on the basis of direct labor hours. For the month of May, the company planned production of 8,000 units (80% of its production capacity of 10,000 units) and prepared the following overhead budget.
| Overhead Budget | Operating Level |
80%
During May, the company operated at 90% capacity (9,000 units) and incurred the following actual overhead costs.
| Overhead costs(actual) | |
| Indirect materials…………………………………………… | $15,000 |
| Indirect labor………………………………………………… | 26,500 |
| Power………………………………………………………… | 6,750 |
| Maintenance…………………………………………………. | 4,000 |
| Rent of factory building……………………………………... | 15,000 |
| Depreciation—Machinery…………………………………… | 10,000 |
| Supervisory salaries…………………………………………. | 22,000 |
| Total actual overhead costs…………………………………. | $99,250 |
- Compute the overhead controllable variance and classify it as favorable or unfavorable.
- Compute the overhead volume variance and classify it as favorable or unfavorable.
- Prepare an overhead variance report at the actual activity level of 9,000 units.
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Problem 21-3A Flexible budget preparation; computation of materials, labor, and overhead variances; and overhead variance report LO P1, P2, P3, P4
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[The following information applies to the questions displayed below.] Antuan Company set the following standard costs for one unit of its product.
Direct materials (6 Ibs. @ $5 per Ib.)
$
30
Direct labor (2 hrs. @ $17 per hr.)
34
Overhead (2 hrs. @ $18.50 per hr.)
37
Total standard cost
$
101
The predetermined overhead rate ($18.50 per direct labor hour) is based on an expected volume of 75% of the factory’s capacity of 20,000 units per month. Following are the company’s budgeted overhead costs per month at the 75% capacity level.
Overhead Budget (75% Capacity)
Variable overhead costs
Indirect materials
$
45,000
Indirect labor
180,000
Power
45,000
Repairs and maintenance
90,000
Total variable overhead costs
$
360,000
Fixed…
Problem 21-3A Flexible budget preparation; computation of materials, labor, and overhead variances; and overhead variance report LO P1, P2, P3, P4
Skip to question
[The following information applies to the questions displayed below.] Antuan Company set the following standard costs for one unit of its product.
Direct materials (6 Ibs. @ $5 per Ib.)
$
30
Direct labor (2 hrs. @ $17 per hr.)
34
Overhead (2 hrs. @ $18.50 per hr.)
37
Total standard cost
$
101
The predetermined overhead rate ($18.50 per direct labor hour) is based on an expected volume of 75% of the factory’s capacity of 20,000 units per month. Following are the company’s budgeted overhead costs per month at the 75% capacity level.
Overhead Budget (75% Capacity)
Variable overhead costs
Indirect materials
$
45,000
Indirect labor
180,000
Power
45,000
Repairs and maintenance
90,000
Total variable overhead costs
$
360,000
Fixed…
Exercise 21-19 (Algo) Overhead controllable and volume variances LO P4
Blaze Corporation allocates overhead on the basis of DLH and the standard amount per allocation base is 3.75 DLH per unit. For
March, the company planned production of 8,000 units (80% of its production capacity of 10,000 units) and prepared the following
budget. The company actually operated at 90% capacity (9,000 units) in March and incurred actual total overhead costs of $151,410.
Overhead Budget
Production in units
Budgeted variable overhead
Budgeted fixed overhead
80% Operating
Levels
8,000
$ 66,000
$ 81,000
1. Compute the standard overhead rate. Hint. Standard allocation base at 80% capacity is 30,000 DLH, computed as 8,000 units ×
3.75 DLH per unit.
2. Compute the total overhead variance.
3. Compute the overhead controllable variance.
4. Compute the overhead volume variance.
Complete this question by entering your answers in the tabs below.
Required 1
Required 2 Required 3
Required 4
Compute the standard…
Chapter 8 Solutions
Managerial Accounting
Ch. 8 - Prob. 1MCQCh. 8 - Prob. 2MCQCh. 8 - Prob. 3MCQCh. 8 - A Company’s standard for a unit of its single...Ch. 8 - Prob. 5MCQCh. 8 - Prob. 1DQCh. 8 - Prob. 2DQCh. 8 - Prob. 3DQCh. 8 - Prob. 4DQCh. 8 - Prob. 5DQ
Ch. 8 - Prob. 6DQCh. 8 - Prob. 7DQCh. 8 - Prob. 8DQCh. 8 - Prob. 9DQCh. 8 - Prob. 10DQCh. 8 - Prob. 11DQCh. 8 - Prob. 12DQCh. 8 - Prob. 13DQCh. 8 - Prob. 14DQCh. 8 - Prob. 15DQCh. 8 - Prob. 16DQCh. 8 - Prob. 17DQCh. 8 - Prob. 18DQCh. 8 - Prob. 1QSCh. 8 - Prob. 2QSCh. 8 - Prob. 3QSCh. 8 - Prob. 4QSCh. 8 - Prob. 5QSCh. 8 - Prob. 6QSCh. 8 - Prob. 7QSCh. 8 - Prob. 8QSCh. 8 - Prob. 9QSCh. 8 - Materials cost variances P2 Juan Company’s output...Ch. 8 - Prob. 11QSCh. 8 - Prob. 12QSCh. 8 - Prob. 13QSCh. 8 - Prob. 14QSCh. 8 - Prob. 15QSCh. 8 - Prob. 16QSCh. 8 - A Preparing overhead entries P5 Refer to the...Ch. 8 - A Total variable overhead cost variance P4 Mosaic...Ch. 8 - A Overhead spending and efficiency variances P4...Ch. 8 - Computing sales price and volume variances A1...Ch. 8 - Sales variances A1 In a recent year, BMW sold...Ch. 8 - Prob. 22QSCh. 8 - Prob. 23QSCh. 8 - Prob. 24QSCh. 8 - Prob. 1ECh. 8 - Prob. 2ECh. 8 - Prob. 3ECh. 8 - Prob. 4ECh. 8 - Prob. 5ECh. 8 - Prob. 6ECh. 8 - Prob. 7ECh. 8 - Exercise 21-8 Standard unit cost; total variance...Ch. 8 - Prob. 9ECh. 8 - Prob. 10ECh. 8 - Prob. 11ECh. 8 - Prob. 12ECh. 8 - Prob. 13ECh. 8 - Exercise 21-14A Materials variances recorded and...Ch. 8 - Prob. 15ECh. 8 - Prob. 16ECh. 8 - Prob. 17ECh. 8 - Prob. 18ECh. 8 - Exercise 21-19 Computation of total overhead rate...Ch. 8 - Exercise 21-20 Computation of volume and...Ch. 8 - Exercise 21-21 Overhead controllable and volume...Ch. 8 - Prob. 22ECh. 8 - Exercise 21-23 Computing and interpreting sales...Ch. 8 - Prob. 1PSACh. 8 - Prob. 2PSACh. 8 - Prob. 3PSACh. 8 - Prob. 4PSACh. 8 - Prob. 5PSACh. 8 - Problem 21-6AA Materials, labor, and overhead...Ch. 8 - Prob. 1PSBCh. 8 - Prob. 2PSBCh. 8 - Prob. 3PSBCh. 8 - Prob. 4PSBCh. 8 - Prob. 5PSBCh. 8 - Problem 21-6BA Materials, labor, and overhead...Ch. 8 - Prob. 8SPCh. 8 - Flexible budgets and standard costs emphasize the...Ch. 8 - Prob. 2AACh. 8 - Prob. 3AACh. 8 - Prob. 1BTNCh. 8 - The reason we use the words favorable when...Ch. 8 - Prob. 3BTNCh. 8 - Prob. 4BTNCh. 8 - Prob. 5BTNCh. 8 - Prob. 6BTN
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