Chapter 9.A, Problem 2E

Predetermined Overhead Rate: Overhead Variances
Norwall Company’s budgeted variable manufacturing overhead cost is $300 per machine.hour and its budgeted fixed manufacturing overhead is $300,000 per month.
The following information is available for a recent month:
a. The denominator activity of 60000 machine-hours is used to compute the predetermined overhead rate.
b. At a denominator activity of 60.000 machine-hours, the company should produce 40,000 units of product.
c. The company’s actual operating results were:

Required:

1. Compute the predetermined overhead rate and break it down into ariable and fixed cost elements.

Compute the standard hours allowed for the actual production.

Compute the variable overhead rate and efficiency variances and the fixed overhead budget and volume variances.