Horngren's Cost Accounting, Student Value Edition Plus MyLab Accounting with Pearson eText - Access Card Package (16th Edition)
16th Edition
ISBN: 9780134642468
Author: Srikant M. Datar, Madhav V. Rajan
Publisher: PEARSON
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Textbook Question
Chapter 8, Problem 8.23E
Variable manufacturing
| Direct manufacturing labor use | 0.02 hours per baguette |
| Variable manufacturing overhead | $10.00 per direct manufacturing labor-hour |
The Sourdough Bread Company provides the following additional data for the year ended December 31, 2017:
| Planned (budgeted) output | 3,100,000 baguettes |
| Actual production | 2,600,000 baguettes |
| Direct manufacturing labor | 46,800 hours |
| Actual variable manufacturing overhead | $617,760 |
- A. What is the denominator level used for allocating variable manufacturing overhead? (That is, for how many direct manufacturing labor-hours is Sourdough Bread budgeting?)
Required
- B. Prepare a variance analysis of variable manufacturing overhead. Use Figure 8-4 (page 304) for reference.
- C. Discuss the variances you have calculated and give possible explanations for them.
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Variable manufacturing overhead variance analysis. The Sourdough Bread Company bakes baguettes for distribution to upscale grocery stores. The company has two direct-cost categories: direct materials and direct manufacturing labor. Variable manufacturing overhead is allocated to products on the basis of standard direct manufacturing labor-hours. Following is some budget data for the Sourdough Bread Company:
What is the denominator level used for allocating variable manufacturing overhead? (That is, for how many direct manufacturing labor-hours is Sourdough Bread budgeting?)
BOTE Inc. produces sustainable plastic bottles, The following tables show the detailed production budgets, volumes, costs, ABC cost drivers and the traditional volume-based costing (VBC) overhead allocation based on direct labor hours (overhead rate base).
Production Data for the Year
Plastic bottle
Selling price
6.00
Budget units of production
20,000
Material cost per unit
P 0.50
Direct labor hours per unit
0.05
Direct labor cost per hour
P 5.00
quality inspections per unit
0.025
Machine hours per unit
0.3
Moves required per unit
4
Activity Conversion Costs for 20,000 units (Budgeted Overhead Cost)
Indirect Cost Components
Costs (Php)
Cost Driver
Total
Depreciation on machinery
75,000
Machine hours
4,010
Quality and finishing
24,000
No of quality inspections
6,000
Material handling
30,000
No. of moves
63,848
Total Indirect Cost
129,000
The budgeted direct…
Chapter 8 Solutions
Horngren's Cost Accounting, Student Value Edition Plus MyLab Accounting with Pearson eText - Access Card Package (16th Edition)
Ch. 8 - How do managers plan for variable overhead costs?Ch. 8 - How does the planning of fixed overhead costs...Ch. 8 - How does standard costing differ from actual...Ch. 8 - What are the steps in developing a budgeted...Ch. 8 - What are the factors that affect the spending...Ch. 8 - Assume variable manufacturing overhead is...Ch. 8 - Describe the difference between a direct materials...Ch. 8 - What are the steps in developing a budgeted fixed...Ch. 8 - Why is the flexible-budget variance the same...Ch. 8 - Explain how the analysis of fixed manufacturing...
Ch. 8 - Provide one caveat that will affect whether a...Ch. 8 - The production-volume variance should always be...Ch. 8 - What are the variances in a 4-variance analysis?Ch. 8 - Overhead variances should be viewed as...Ch. 8 - Describe how flexible-budget variance analysis can...Ch. 8 - Each of the following statements is correct...Ch. 8 - Steed Co. budgets production of 150,000 units in...Ch. 8 - As part of her annual review of her companys...Ch. 8 - Culpepper Corporation had the following...Ch. 8 - Fordham Corporation produces a single product. The...Ch. 8 - Variable manufacturing overhead, variance...Ch. 8 - Fixed manufacturing overhead, variance analysis...Ch. 8 - Variable manufacturing overhead variance analysis....Ch. 8 - Fixed manufacturing overhead variance analysis...Ch. 8 - Manufacturing overhead, variance analysis. The...Ch. 8 - 4-variance analysis, fill in the blanks. ProChem...Ch. 8 - Straightforward 4-variance overhead analysis. The...Ch. 8 - Straightforward coverage of manufacturing...Ch. 8 - Overhead variances, service sector. Meals Made...Ch. 8 - Total overhead, 3-variance analysis. Pampered...Ch. 8 - Production-volume variance analysis and...Ch. 8 - Overhead variances, service setting. Carlyle...Ch. 8 - Identifying favorable and unfavorable variances....Ch. 8 - Flexible-budget variances, review of Chapters 7...Ch. 8 - Comprehensive variance analysis. Cooking Whiz...Ch. 8 - Journal entries (continuation of 8-35). A. Prepare...Ch. 8 - Graphs and overhead variances. Best Around, Inc.,...Ch. 8 - Overhead variance, missing information. Consider...Ch. 8 - Flexible budgets, 4-variance analysis. (CMA,...Ch. 8 - Activity-based costing, batch-level variance...Ch. 8 - Overhead variances and sales-volume variance. The...Ch. 8 - Activity-based costing, batch-level variance...Ch. 8 - Comprehensive review of Chapters 7 and 8, working...Ch. 8 - Review of Chapters 7 and 8, 3-variance analysis....Ch. 8 - Nonfinancial variances. Kathys Kettle Potato Chips...Ch. 8 - Overhead variances, service sector. Cavio is a...Ch. 8 - Direct-cost and overhead variances, income...Ch. 8 - Overhead variances, ethics. Carpenter Company uses...
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What is variance analysis?; Author: Corporate finance institute;https://www.youtube.com/watch?v=SMTa1lZu7Qw;License: Standard YouTube License, CC-BY