A furniture manufacturer has a standard costing system based on standard direct labor-hours (DLHs) as the measure of activity. Data from the company's flexible budget for manufacturing overhead are given below:

A furniture manufacturer has a standard costing system based on standard direct labor-hours (DLHs) as the measure of activity. Data from the company's flexible budget for manufacturing overhead are given below:

	Denominator level of activity.........................................	8,500	DLHs
	Overhead costs at the denominator activity level:
	Variable overhead cost................................................	$19,550
	Fixed overhead cost.....................................................	$93,075

The following data pertain to operations for the most recent period:

	Actual hours...................................................................	8,600	DLHs
	Standard hours allowed for the actual output.................	8,575	DLHs
	Actual total variable overhead cost................................	$18,490
	Actual total fixed overhead cost.....................................	$91,225

    114. What is the predetermined overhead rate to the nearest cent?

            A)      $12.91

            B)      $13.10

            C)      $12.76

            D)      $13.25

           

            Ans:  D     LO:  5    

            Solution:

            Predetermined overhead rate = ($19,550 + $93,075) ÷ 8,500 DLHs

            = $112,625 ÷ 8,500 DLHs = $13.25 per DLH

    115. How much overhead was applied to products during the period to the nearest dollar?

            A)      $109,715

            B)      $112,625

            C)      $113,619

            D)      $113,950

           

            Ans:  C     LO:  5    

            Solution:

           

            Predetermined overhead rate = ($19,550 + $93,075) ÷ 8,500 DLHs

= $112,625 ÷ 8,500 DLHs = $13.25 per DLH

Applied overhead = Standard hours allowed for actual output × Predetermined overhead rate = 8,575 DLHs × $13.25 per DLH = $113,619

    116. What was the fixed overhead budget variance for the period to the nearest dollar?

            A)      $265 F

            B)      $1,850 F

            C)      $2,671 U

            D)      $2,945 U

           

            Ans:  B     LO:  6    

            Solution:

            Budget variance = Actual fixed overhead cost − Budgeted fixed overhead cost

            = $91,225 − $93,075 = $1,850 F

    117. What was the fixed overhead volume variance for the period to the nearest dollar?

            A)      $274 U

            B)      $1,095 F

            C)      $798 F

            D)      $821 F

           

            Ans:  D     LO:  6    

            Solution:

           

            Fixed portion of predetermined overhead rate =

Budgeted fixed overhead cost ÷ Denominator activity level

$93,075 ÷ 8,500 DLHs = $10.95 per DLH

Volume variance = Fixed portion of predetermined overhead rate × (Denominator hours − Standard hours allowed)

= $10.95 per DLH × (8,500 DLHs − 8,575 DLHs)

= $10.95 per DLH × 75 DLHs = $821 F

Use the following to answer questions 118-121:

A manufacturer of playground equipment has a standard costing system based on standard machine-hours (MHs) as the measure of activity. Data from the company's flexible budget for manufacturing overhead are given below:

	Denominator level of activity...............................	8,800	MHs
	Fixed overhead cost...............................................	$71,720

The following data pertain to operations for the most recent period:

	Actual hours..........................................................	8,500	MHs
	Standard hours allowed for the actual output........	8,556	MHs
	Actual total fixed overhead cost............................	$71,470

    118. What is the predetermined fixed overhead rate to the nearest cent?

            A)      $8.41

            B)      $8.12

            C)      $8.15

            D)      $8.44

           

            Ans:  C     LO:  5    

            Solution:

            Predetermined fixed overhead rate = $71,720 ÷ 8,800 MHs = $8.15 per MH

    119. How much fixed overhead was applied to products during the period to the nearest dollar?

            A)      $71,470

            B)      $69,275

            C)      $71,720

            D)      $69,731

           

            Ans:  D     LO:  5    

            Solution:

           

            Predetermined fixed overhead rate = $71,720 ÷ 8,800 MHs = $8.15 per MH

Applied fixed overhead = 8,556 MHs × $8.15 per MH = $69,731

    120. What was the fixed overhead budget variance for the period to the nearest dollar?

            A)      $1,739 F

            B)      $471 U

            C)      $250 F

            D)      $2,195 F

           

            Ans:  C     LO:  6    

            Solution:

            Budget variance = Actual fixed overhead cost − Budgeted fixed overhead cost

            = $71,470 − $71,720 = $250 F

    121. What was the fixed overhead volume variance for the period to the nearest dollar?

            A)      $2,038 U

            B)      $456 F

            C)      $2,445 U

            D)      $1,989 U

           

            Ans:  D     LO:  6    

            Solution:

           

Volume variance = Fixed portion of predetermined overhead rate × (Denominator hours − Standard hours allowed)

= ($71,720 ÷ 8,800 MHs) × (8,800 MHs − 8,556 MHs)

= $8.15 per MH × 244 MHs = $1,989 U

Use the following to answer questions 122-123:

Rodriquez Manufacturing Company uses a standard cost system with machine-hours as the activity base for overhead. Rodriquez used a denominator activity level of 15,000 machine-hours last year. At this level, budgeted variable manufacturing overhead totaled $108,000 and budgeted fixed manufacturing overhead totaled $378,000. During the year, 18,000 machine-hours were actually incurred. The standard machine-hours allowed for actual output were 20,000. Total actual manufacturing overhead was $135,000 for variable overhead and $394,200 for fixed overhead.

    122. What was Rodriquez's fixed overhead budget variance?

            A)      $16,200 unfavorable

            B)      $59,400 favorable

            C)      $109,800 favorable

            D)      $126,000 unfavorable

           

            Ans:  A     LO:  6    

            Solution:

            Budget variance = Actual fixed overhead cost − Budgeted fixed overhead cost

            = $394,200 − $378,000 = $16,200 U

    123. What is Rodriquez's total under- or overapplied overhead cost?

            A)      $21,600 underapplied

            B)      $43,200 underapplied

            C)      $54,000 overapplied

            D)      $118,800 overapplied

           

            Ans:  D     LO:  5    

            Solution:

           

            Predetermined overhead rate = ($108,000 + $378,000) ÷ 15,000 MHs

= $486,000 ÷ 15,000 MHs = $32.40 per MH

Applied overhead = 20,000 MHs × $32.40 per MH = $648,000

Actual overhead = $135,000 + $394,200 = $529,200

$648,000 − $529,200 = $118,800 overapplied

Use the following to answer questions 124-125:

A manufacturer of industrial equipment has a standard costing system based on standard direct labor-hours (DLHs) as the measure of activity. Data from the company's flexible budget for manufacturing overhead are given below:

	Denominator level of activity.........................................	2,200	DLHs
	Overhead costs at the denominator activity level:
	Variable overhead cost................................................	$12,760
	Fixed overhead cost.....................................................	$29,810

The following data pertain to operations for the most recent period:

	Actual hours...................................................................	2,100	DLHs
	Standard hours allowed for the actual output.................	2,108	DLHs
	Actual total variable overhead cost................................	$12,390
	Actual total fixed overhead cost.....................................	$29,360

    124. What is the predetermined overhead rate to the nearest cent?

            A)      $18.98

            B)      $20.27

            C)      $19.88

            D)      $19.35

           

            Ans:  D     LO:  5    

            Solution:

            Predetermined overhead rate = ($12,760 + $29,810) ÷ 2,200 DLHs = $19.35 per DLH

    125. How much overhead was applied to products during the period to the nearest dollar?

            A)      $42,570

            B)      $40,790

            C)      $40,635

            D)      $41,750

           

            Ans:  B     LO:  5    

            Solution:

           

            Predetermined overhead rate =

($12,760 + $29,810) ÷ 2,200 DLHs = $19.35 per DLH

Applied overhead = Standard hours for actual output × Predetermined overhead rate = 2,108 DLHs × $19.35 per DLH = $40,790

Use the following to answer questions 126-128:

Muscato Corporation's flexible budget for two levels of activity appears below:

		Cost Formula (per machine-hour)	Activity (in machine-hours)
			7,500	7,600
	Variable overhead costs:
	Supplies................................	$ 9.70	$    72,750	$    73,720
	Indirect labor........................	9.30	69,750	70,680
	Total variable overhead cost...	$19.00	142,500	144,400
	Fixed overhead costs:
	Salaries.................................		672,600	672,600
	Occupancy costs...................		769,500	769,500
	Total fixed overhead cost........		1,442,100	1,442,100
	Total overhead cost.................		$1,584,600	$1,586,500

    126. If the denominator level of activity is 7,500 machine-hours, the variable element in the predetermined overhead rate would be:

            A)      $208.75

            B)      $192.28

            C)      $211.28

            D)      $19.00

           

            Ans:  D     LO:  5    

            Solution:

            Variable element = $142,500 ÷ 7,500 MHs = $19.00 per MH

    127. If the denominator level of activity is 7,500 machine-hours, the fixed element in the predetermined overhead rate would be:

            A)      $192.28

            B)      $211.28

            C)      $19.00

            D)      $1,900.00

           

            Ans:  A     LO:  5    

            Solution:

            Fixed element = $1,442,100 ÷ 7,500 MHs = $192.28 per MH

    128. If the denominator level of activity is 7,600 machine-hours, the predetermined overhead rate would be:

            A)      $1,900.00

            B)      $19.00

            C)      $189.75

            D)      $208.75

           

            Ans:  D     LO:  5    

            Solution:

            Predetermined overhead rate = $1,586,500 ÷ 7,600 MHs = $208.75 per MH