Gerhan Company's flexible budget for the units manufactured in May shows $15,640 of total factory overhead;...
Gerhan Company's flexible budget for the units manufactured in May shows $15,640 of total factory overhead; this output level represents 70% of available capacity. During May, the company applied overhead to production at the rate of $3.00 per direct labor hour (DLH), based on a denominator volume level of 6,120 DLHs, which represents 90% of available capacity. The company used 5,000 DLHs and incurred $16,500 of total factory overhead cost during May, including $6,800 for fixed factory overhead.
What is the factory overhead efficiency variance (to the nearest whole dollar) for May under the assumption that Gerhan uses a four-variance breakdown (decomposition) of the total overhead variance?
Multiple Choice
-
$180 unfavorable.
-
$380 favorable.
-
$380 unfavorable.
-
$480 unfavorable.
-
$480 favorable.
Homework Answers
Solution:
Budgeted overhead at 90% capacity = 6120*3 = $18,360
Budgeted overhead at 70% capacity = $15,640
DLH at 70% capacity = 6120/90%*70% = 4760 hours
Variable overhead rate = ($18,360 - $15,640) / (6120 - 4760) = $2 per DLH
actual hours in may = 5000 DLH
Variable overhead efficiency variance = (SH - AH) * SR = (4760 - 5000) * $2 = $480 unfavorable
Hence 4th option is correct.
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Gerhan Company's flexible budget for the units manufactured in
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$3,200 favorable.
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Multiple Choice
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Multiple Choice
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$1,400 unfavorable.
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b.The fixed overhead production volume variance for
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Multiple Choice
$11,280 favorable.
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$51,840 favorable.
Bluecap Co. uses a standard cost system and flexible budgets for control purposes. The following budgeted information pertains to 2019: Denominator volume-number of units Denominator...
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Standard direct labor hours (DLHs) per unit produced
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27,720
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The total factory overhead spending
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$3,200 favorable.
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$15,040 favorable.
$17,280 favorable.
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variance, to the nearest whole dollar, is:
Multiple Choice
$400 favorable.
$600 unfavorable.
$1,400 favorable.
$1,400 unfavorable.
$2,000 favorable.
b.
Under a two-variance breakdown (decomposition) of the total
factory overhead variance, the total flexible-budget variance, to
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Multiple Choice
$400 favorable.
$600 unfavorable.
$1,400 favorable.
$1,400 unfavorable.
$2,000 favorable.
The following information for the past year is available from Thinnews...
a)The total overhead variance in
2019 for Bluecap Co., to the nearest whole dollar, was:
Multiple Choice
$14,000 unfavorable.
$15,040 favorable.
$17,280 favorable.
$37,840 favorable.
$37,840 unfavorable.
b.The fixed overhead production volume variance for
Bluecap Co. in 2019, to the nearest dollar, was:
Multiple Choice
$11,280 favorable.
$17,280 favorable.
$28,800 unfavorable.
$34,800 unfavorable.
$51,840 favorable.
Bluecap Co. uses a standard cost system and flexible budgets for control purposes. The following budgeted information pertains to 2019: Denominator volume-number of units Denominator...
Multiple Choice
$11,000 unfavorable.
$141,046 favorable.
$143,286 favorable.
$163,846 favorable.
$163,846 unfavorable.
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Practical capacity, in DLHs (per year)
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Variable overhead efficiency variance
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unfavorable (U)
Actual production for the year
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Budgeted fixed manufacturing overhead
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Insurance and property taxes
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