Question

Use the following information for the Exercises below. [The following information applies to the questions displayed below] Sedona Company set the following standard costs for one unit of its product for 2017 Direct material (30 lbs. $2.50 per lb.) Direct labor (20 hrs. @ $4.80 per hr.) Factory variable overhead (20 hrs. @ $2.30 per hr.) Factory fixed overhead (20 hrs.@ $1.20 per hr.) $ 75.00 96.00 46.00 24.00 $241.00 Standard cost The $3.50 ($2.30 $1.20) total overhead rate per direct labor hour is based on an expected operating level equal to 70% of the factory's capacity of 53,000 units per month. The following monthly flexible budget information is also available Operating Levels (% of capacity) Flexible Budget Budgeted output (units) Budgeted labor (standard hours) Budgeted overhead (dollars) 65% 70% 75% 34,450 689,000 37,100 39,750 742,000 795,000 $1,584,700 $1,706,600 $1,828,500 Variable overhead Fixed overhead 890,400 890.400 890.400 $2,475,100 $2,597,000 $2,718,900 Total overhead During the current month, the company operated at 65% of capacity, employees worked 652,000 hours, and the following actual overhead costs were incurred. $1,525,000 954,000 Variable overhead costs Fixed overhead costs $2,479,000 Total overhead costs AH Actual Hours SH Standard Hours AVR Actual Variable Rate SVR Standard Variable Rate SFR Standard Fixed Rate

Answer 1

(1) Predetermined OH Rate 1 & 2.30 Per DL hr Variable overhead costs $ 1.20 fixed overhead costs Per DL her. $ 3.50 Per DL her Total overhead costs ---- At 654% of operating cupacity ---- Predetermined Standard 1 Overhead Actual variance fav./Unf. DL HOUT COSI Routts OH Rate ! Applied $ 2.30 684.000 $1,584,700 +1525,000 $ 59,700 Favorable Nariable oveghead costs | fixed overhead Total overhead costs costs $ 1:20 1689,000 & 826,000 & 9 54,000 & 127,200 Unfavorable $ 3.50 $2,411,500 $2,479,000 $67,500 Unfavorable (2) Calculation : Overhead costs applied = predetermined OH Rate x Standard DL Hours $1,584,700 Variable overhead costs = $2.30 x 689,000 = 689,000 = $ 826,800 Pixed over head costs = $ 1.20 X Variance a Overhead costs applied - Actual Results Variable Overhead costs = 1,584,700 - $ 1,525,000 = $ 54,700 fixed overhead costs = $ 826, 800 & 9 54,000 = + 121,200 Total overhead costs = $2, U11, Soo - $ 2,4 79,000 = $ 67,500