Question

[The following information applies to the questions displayed below. Sedona Company set the following standard costs for one unit of its product for this year. Direct material (15 Ibs. @ $4.20 per Ib.) Direct labor (10 hrs. $6.40 per hr.) Variable overhead (10 hrs. @ $3.70 per hr.) Fixed overhead (10 hrs. $1.50 per hr.) Total standard cost $ 63.00 64.00 37.00 15.00 $179.00 The $5.20 ($3.70 + $1.50) total overhead rate per direct labor hour is based on an expected operating level equal to 65% of the factory's capacity of 67,000 units per month. The following monthly flexible budget information is also available. 651 700 Operating Levels of capacity) 608 40,200 43,550 46,900 402,000 435,500 469,000 Flexible Budget Budgeted output (units) Budgeted labor (standard hours) Budgeted overhead (dollars) Variable overhead Pixed overhead Total overhead $1,487, 400 653, 250 $ 2, 140,650 $1,611,350 653,250 $2,264,600 $1,735,300 653,250 $2,388,550 During the current month, the company operated at 60% of capacity, employees worked 382,000 hours, and the following actual overhead costs were incurred. Variable overhead costs Fixed overhead costs Total overhead costs $1,425,000 725, 250 $2,150,250 < Prev 8 9 of 17 # Next >

Answer 1

5	1	predetermined overhead rate
6		Expected value		65%
7		Expected total overhead		2264600
8		Expected hours		435500
9		Variable cost per hour = 1611350/435500		3.70
10		Fixed cost per hour = 653250/435500		1.50
11		Total cost		5.20
12
13	2	Variable overhead cost variance
14		Variable overhead cost incurred		1425000
15		Variable overhead cost applied =402000 hours (60% CAPACITY) * 3.70		1487400
16
17		Variance		62400	F
18
19		fixed overhead cost variance
20		fixed overhead cost incurred		725250
21		fixed overhead cost applied =402000 hours (60% CAPACITY) * 1.50		603000
22
23		Variance		122250	U
24
25		Total overhead cost incurred = (1425000+725250)		2150250
26		Total overhead cost applied = (1487400+603000)		2090400
27
28		Variance		59850	U

FORMULA:

5	1	predetermined overhead rate
6		Expected value		0.65
7		Expected total overhead		2264600
8		Expected hours		435500
9		Variable cost per hour = 1611350/435500		=1611350/G8
10		Fixed cost per hour = 653250/435500		=653250/G8
11		Total cost		=SUM(G9:G10)
12
13	2	Variable overhead cost variance
14		Variable overhead cost incurred		1425000
15		Variable overhead cost applied =402000 hours (60% CAPACITY) * 3.70		=402000*3.7
16
17		Variance		=+G15-G14	F
18
19		fixed overhead cost variance
20		fixed overhead cost incurred		725250
21		fixed overhead cost applied =402000 hours (60% CAPACITY) * 1.50		=402000*1.5
22
23		Variance		=G20-G21	U
24
25		Total overhead cost incurred = (1425000+725250)		=1425000+725250
26		Total overhead cost applied = (1487400+603000)		=1487400+603000
27
28		Variance		=G25-G26	U