Bartoletti
Fabrication Corporation has a standard cost system in which it applies
manufacturing overhead to products on the basis of standard machine-hours
(MHs). The company's cost formula for variable manufacturing overhead is $4.60
per MH. The company had budgeted its fixed manufacturing overhead cost at
$65,000 for the month. During the month, the actual total variable
manufacturing overhead was $22,080 and the actual total fixed manufacturing
overhead was $63,000. The actual level of activity for the period was 4,600
MHs. What was the total of the variable overhead spending and fixed overhead
budget variances for the month?
A) $1,080
unfavorable
B) $1,080
favorable
C) $920
unfavorable
D) $920
favorable
Ans: B
Solution:
Actual rate = Actual variable
manufacturing overhead ÷ Actual machine-hours
=
$22,080 ÷ 4,600 = $4.80
Variable
overhead spending variance = AH × (AR − SR)
=
4,600 × ($4.80 − $4.60)
=
4,600 × $0.20 = $920 U
Fixed
overhead budget variance
=
Actual fixed overhead costs − Budgeted fixed overhead cost
=
$63,000 − $65,000 = $2,000 F
Total
overhead variance = $920 U + $2,000 F = $1,080 F
42. Amirault
Manufacturing Corporation has a standard cost system in which it applies
manufacturing overhead to products on the basis of standard machine-hours
(MHs). The company's cost formula for variable manufacturing overhead is $4.00
per MH. During the month, the actual total variable manufacturing overhead was
$18,040 and the actual level of activity for the period was 4,100 MHs. What was
the variable overhead spending variance for the month?
A) $410
favorable
B) $1,640
unfavorable
C) $1,640
favorable
D) $410
unfavorable
Ans: B
Solution:
Actual rate = Actual variable
manufacturing overhead ÷ Actual machine-hours
=
$18,040 ÷ 4,100 = $4.40
Variable
overhead spending variance = AH × (AR − SR)
=
4,100 × ($4.40 − $4.00) = 4,100 × $0.40 = $1,640 U
43. Goolden
Electronics Corporation has a standard cost system in which it applies
manufacturing overhead to products on the basis of standard machine-hours
(MHs). The company had budgeted its fixed manufacturing overhead cost at
$58,000 for the month and its level of activity at 2,500 MHs. The actual total
fixed manufacturing overhead was $61,200 for the month and the actual level of
activity was 2,600 MHs. What was the fixed overhead budget variance for the
month to the nearest dollar?
A) $880
unfavorable
B) $880
favorable
C) $3,200
favorable
D) $3,200
unfavorable
Ans: D
Solution:
Fixed
overhead budget variance
= Actual fixed overhead cost −
Budgeted fixed overhead cost
= $61,200 − $58,000 = $3,200 U
44. Wadding
Corporation applies manufacturing overhead to products on the basis of standard
machine-hours. For the most recent month, the company based its budget on 3,600
machine-hours. Budgeted and actual overhead costs for the month appear below:
|
|
|
Original Budget Based on 3,600
Machine-Hours
|
Actual Costs
|
|
|
Variable
overhead costs:
|
|
|
|
|
Supplies......................................
|
$11,160
|
$11,830
|
|
|
Indirect
labor..............................
|
26,280
|
27,970
|
|
|
Fixed
overhead costs:
|
|
|
|
|
Supervision.................................
|
19,700
|
19,340
|
|
|
Utilities.......................................
|
5,900
|
5,770
|
|
|
Factory
depreciation...................
|
6,900
|
7,210
|
|
|
Total
overhead cost.......................
|
$69,940
|
$72,120
|
The company actually worked 3,900
machine-hours during the month. The standard hours allowed for the actual
output were 3,890 machine-hours for the month. What was the overall variable
overhead efficiency variance for the month?
A) $760
favorable
B) $104
unfavorable
C) $180
favorable
D) $656
favorable
Ans: B
Solution:
|
|
|
Variable overhead costs
|
Machine-hours
|
Per machine-hour
|
|
|
Supplies............................
|
$11,160
|
3,600
|
$3.10
|
|
|
Indirect
labor....................
|
$26,280
|
3,600
|
$7.30
|
Budgeted
machine-hours: 3,600
Actual
machine-hours: 3,900
Standard
machine-hours allowed: 3,890
|
|
|
Cost Formula (per MH)
|
(1)
Budget Based on 3,900 MHs (AH ×
SR)
|
|
(2)
Budget Based on 3,890 MHs (SH ×
SR)
|
(1) − (2)
Efficiency Variance
|
|
|
Overhead
Costs
|
|
|
|
|
|
|
|
Variable
overhead costs:
|
|
|
|
|
|
|
|
Supplies.................
|
$
3.10
|
$12,090
|
*
|
$12,059
|
$
31 U
|
|
|
Indirect
labor.........
|
7.30
|
28,470
|
**
|
$28,397
|
73 U
|
|
|
|
$10.40
|
$40,560
|
|
|
$104
U
|
*3,900
machine-hours × $3.10 per machine-hour = $12,090
**3,900
machine-hours × $7.30 per machine-hour = $28,470
45. Mongar
Corporation applies manufacturing overhead to products on the basis of standard
machine-hours. Budgeted and actual overhead costs for the most recent month
appear below:
|
|
|
Original Budget
|
Actual Costs
|
|
|
Variable
overhead costs:
|
|
|
|
|
Supplies......................................
|
$ 7,980
|
$ 8,230
|
|
|
Indirect
labor..............................
|
29,820
|
29,610
|
|
|
Total
variable overhead cost.........
|
$37,800
|
$37,840
|
The original budget was based on
4,200 machine-hours. The company actually worked 4,350 machine-hours during the
month and the standard hours allowed for the actual output were 4,190
machine-hours. What was the overall variable overhead efficiency variance for
the month?
A) $130
unfavorable
B) $950
favorable
C) $1,310
favorable
D) $1,440
unfavorable
Ans: D
Solution:
|
|
|
Variable overhead costs
|
Machine-hours
|
Per machine-hour
|
|
|
Supplies.................
|
$7,980
|
4,200
|
$1.90
|
|
|
Indirect
labor.........
|
$29,820
|
4,200
|
$7.10
|
Budgeted
machine-hours: 4,200
Actual
machine-hours: 4,350
Standard
machine-hours allowed: 4,190
|
|
|
Cost Formula (per MH)
|
(1)
Budget Based on 4,350 MHs (AH ×
SR)
|
|
(2)
Budget Based on 4,190 MHs (SH ×
SR)
|
(1) − (2)
Efficiency Variance
|
|
|
Variable overhead costs:
|
|
|
|
|
|
|
|
Supplies...............
|
$1.90
|
$8,265
|
*
|
$7,961
|
$ 304 U
|
|
|
Indirect
labor.......
|
$7.10
|
$30,885
|
**
|
$29,749
|
1,136 U
|
|
|
|
|
|
|
|
$1,440
U
|
*4,350
machine-hours × $1.90 per machine-hour = $8,265
**4,350
machine-hours × $7.10 per machine-hour = $30,885
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