Ana Carillo and Associates is a medium-sized company located near a large metropolitan area in the Midwest. The company manufactures cabinets of mahogany, oak, and other fine woods for use in expensive homes, restaurants, and hotels. Although some of the work is custom, many of the cabinets are a standard size.One non-custom model is called Luxury Base Frame. Normal production is 1,000 units. Each unit has a direct labor hour standard of 5 hours. Overhead is applied to production based on standard direct labor hours. During the most recent month, only 900 units were produced; 4,500 direct labor hours were allowed for standard production, but only 4,000 hours were used. Standard and actual overhead costs were as follows. InstructionsIndirect materialsIndirect labor(Fixed) Manufacturing supervisors salaries(Fixed) Manufacturing office employees salaries(Fixed) Engineering costsComputer costsElectricityRealWorld ForHIS(Fixed) Manufacturing building depreciation(Fixed) Machinery depreciation(Fixed) Trucks and forklift depreciationSmall tools(Fixed) Insurance(Fixed) Property taxesTotalStandard(1,000 units)$ 12,00043,00022,50013,00027,00010,0002,5008,0003,0001,500700500300$144,000Actual(900 units)$ 12,30051,00022,00012,50025,00010,00012,5008,0003,0001,5001,400500300$150,000a. Determine the overhead application rate.b. Determine how much overhead was applied to production.c. Calculate the total overhead variance, controllable variance, and volume variance.d. Decide which overhead variances should be investigated.e. Discuss causes of the overhead variances. What can management do to improve its performance next month?

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Ana Carillo and Associates is a medium-sized company located near a large metropolitan area in the Midwest. The company manufactures cabinets of mahogany, oak, and other fine woods for use in expensive homes, restaurants, and hotels. Although some of the work is custom, many of the cabinets are a standard size. One non-custom model is called Luxury Base Frame. Normal production is 1,000 units. Each unit has a direct labor hour standard of 5 hours. Overhead is applied to production based on standard direct labor hours. During the most recent month, only 900 units were produced; 4,500 direct labor hours were allowed for standard production, but only 4,000 hours were used. Standard and actual overhead

Ana Carillo and Associates is a medium-sized company located near a large metropolitan area in the Midwest. The company manufactures cabinets of mahogany, oak, and other fine woods for use in expensive homes, restaurants, and hotels. Although some of the work is custom, many of the cabinets are a standard size. One non-custom model is called Luxury Base Frame. Normal production is 1,000 units. Each unit has a direct labor hour standard of 5 hours. Overhead is applied to production based on standard direct labor hours. During the most recent month, only 900 units were produced; 4,500 direct labor hours were allowed for standard production, but only 4,000 hours were used. Standard and actual overhead

Survey of Accounting (Accounting I)

8th Edition

ISBN:9781305961883

Author:Carl Warren

Publisher:Carl Warren

Chapter11: Cost-volume-profit Analysis

Section: Chapter Questions

Problem 11.2E: Identify cost graphs The following cost graphs illustrate various types of cost behavior: For each...

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