Predetermined OH Lansing Mfg. prepared the following annual abbreviated flexible budget for different levels of machine hours: 72,000 79,200 86,400 93,600 Variable manufacturing overhead $144,000 $158,400 $172,800 $187,200 Fixed manufacturing overhead 585,000 585,000 585,000 585,000 Each product requires four hours of machine time, and the company expects to produce 18,000units for the year. Production is expected to be evenly distributed throughout the year. a. Calculate separate predetermined variable and fixed OH rates using as the basis of application (1) units of production and (2) machine hours. Note: Do not round your answers. Variable OH Rate Fixed OH Rate (1) Units of production Answer Answer (2) Machine hours Answer Answer b. Calculate the combined predetermined OH rate using (1) units of product and (2) machine hours. Note: Do not round your answers. Combined Rate (1) Units of production Answer (2) Machine hours Answer Variable OH Answer Answer Fixed OH Answer Answer c. Assume that all actual overhead costs are equal to expected overhead costs for the year, but that Lansing Mfg. produced 19,800 units of product. If the separate rates based on units of product calculated in (a) were used to apply overhead, what amounts of underapplied or overapplied variable and fixed overhead exist at year-end? Note: Do not use a negative sign with your answer.
Master Budget
A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.
Sales Budget and Selling
A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.
Predetermined OH
Lansing Mfg. prepared the following annual abbreviated flexible budget for different levels of machine hours:
| 72,000 | 79,200 | 86,400 | 93,600 | |
|---|---|---|---|---|
| Variable manufacturing overhead | $144,000 | $158,400 | $172,800 | $187,200 |
| Fixed manufacturing overhead | 585,000 | 585,000 | 585,000 | 585,000 |
Each product requires four hours of machine time, and the company expects to produce 18,000units for the year. Production is expected to be evenly distributed throughout the year.
a. Calculate separate predetermined variable and fixed OH rates using as the basis of application (1) units of production and (2) machine hours.
Note: Do not round your answers.
| Variable OH Rate | Fixed OH Rate | |
|---|---|---|
| (1) Units of production | Answer
|
Answer
|
| (2) Machine hours | Answer
|
Answer
|
b. Calculate the combined predetermined OH rate using (1) units of product and (2) machine hours.
Note: Do not round your answers.
| Combined Rate | |||||
| (1) Units of production | Answer
|
||||
| (2) Machine hours | Answer
|
| Variable OH | Answer
|
Answer | |||
| Fixed OH | Answer
|
Answer |
c. Assume that all actual overhead costs are equal to expected overhead costs for the year, but that Lansing Mfg. produced 19,800
units of product. If the separate rates based on units of product calculated in (a) were used to apply overhead, what amounts of underapplied or overapplied variable and fixed overhead exist at year-end?
Note: Do not use a negative sign with your answer.
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