Presented below is a flexible manufacturing overhead budget for Ayayai Manufacturing, which manufactures fine timepieces: ✓ Activity Index: Standard direct labor hours 2,820 3,220 3,620 4,020 Variable costs Indirect materials $ 5,640 $ 6,440 $ 7,240 $ 8,040 Indirect labor 3,243 3,703 4,163 4,623 Utilities 7,332 8,372 9,412 10,452 Total variable 16,215 18,515 20,815 23,115 Fixed costs Supervisory salaries 1,210 1,210 1,210 1,210 Rent 2,815 2,815 2,815 2,815 Total fixed 4,025 4,025 4,025 4,025 Total costs $ 20,240 $ 22,540 $ 24,840 $ 27,140 The company applies the overhead on the basis of direct labor hours at $7.00 per direct labor hour and the standard hours per timepiece is 1/2 hour each. The company's actual production was 5,440 timepieces with 2,720 actual hours of direct labor. Normal capacity is 3,220 hours. Actual overhead was $20,400. (a) Compute the controllable and volume overhead variances. Identify whether each variance is favorable or unfavorable. (Round rate values to 2 decimal places, e.g. 2.75 and final answers to O decimal places, e.g. 5,275.) Controllable Overhead Variance Overhead Volume Variance $
Presented below is a flexible manufacturing overhead budget for Ayayai Manufacturing, which manufactures fine timepieces: ✓ Activity Index: Standard direct labor hours 2,820 3,220 3,620 4,020 Variable costs Indirect materials $ 5,640 $ 6,440 $ 7,240 $ 8,040 Indirect labor 3,243 3,703 4,163 4,623 Utilities 7,332 8,372 9,412 10,452 Total variable 16,215 18,515 20,815 23,115 Fixed costs Supervisory salaries 1,210 1,210 1,210 1,210 Rent 2,815 2,815 2,815 2,815 Total fixed 4,025 4,025 4,025 4,025 Total costs $ 20,240 $ 22,540 $ 24,840 $ 27,140 The company applies the overhead on the basis of direct labor hours at $7.00 per direct labor hour and the standard hours per timepiece is 1/2 hour each. The company's actual production was 5,440 timepieces with 2,720 actual hours of direct labor. Normal capacity is 3,220 hours. Actual overhead was $20,400. (a) Compute the controllable and volume overhead variances. Identify whether each variance is favorable or unfavorable. (Round rate values to 2 decimal places, e.g. 2.75 and final answers to O decimal places, e.g. 5,275.) Controllable Overhead Variance Overhead Volume Variance $
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
![Presented below is a flexible manufacturing overhead budget for Ayayai Manufacturing, which manufactures fine timepieces: ✓
Activity Index:
Standard direct labor hours
2,820
3,220
3,620
4,020
Variable costs
Indirect materials
$
5,640
$
6,440
$
7,240
$ 8,040
Indirect labor
3,243
3,703
4,163
4,623
Utilities
7,332
8,372
9,412
10,452
Total variable
16,215
18,515
20,815
23,115
Fixed costs
Supervisory salaries
1,210
1,210
1,210
1,210
Rent
2,815
2,815
2,815
2,815
Total fixed
4,025
4,025
4,025
4,025
Total costs
$ 20,240
$ 22,540
$ 24,840 $ 27,140
The company applies the overhead on the basis of direct labor hours at $7.00 per direct labor hour and the standard hours per
timepiece is 1/2 hour each. The company's actual production was 5,440 timepieces with 2,720 actual hours of direct labor. Normal
capacity is 3,220 hours. Actual overhead was $20,400.
(a)
Compute the controllable and volume overhead variances. Identify whether each variance is favorable or unfavorable. (Round
rate values to 2 decimal places, e.g. 2.75 and final answers to O decimal places, e.g. 5,275.)
Controllable Overhead Variance
Overhead Volume Variance
$](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F9283f0c0-822c-4c09-b5ec-f3f4d2b64d0f%2Feda27bf1-098b-4605-9755-442fbeb59e30%2F9lkgy4p_processed.png&w=3840&q=75)
Transcribed Image Text:Presented below is a flexible manufacturing overhead budget for Ayayai Manufacturing, which manufactures fine timepieces: ✓
Activity Index:
Standard direct labor hours
2,820
3,220
3,620
4,020
Variable costs
Indirect materials
$
5,640
$
6,440
$
7,240
$ 8,040
Indirect labor
3,243
3,703
4,163
4,623
Utilities
7,332
8,372
9,412
10,452
Total variable
16,215
18,515
20,815
23,115
Fixed costs
Supervisory salaries
1,210
1,210
1,210
1,210
Rent
2,815
2,815
2,815
2,815
Total fixed
4,025
4,025
4,025
4,025
Total costs
$ 20,240
$ 22,540
$ 24,840 $ 27,140
The company applies the overhead on the basis of direct labor hours at $7.00 per direct labor hour and the standard hours per
timepiece is 1/2 hour each. The company's actual production was 5,440 timepieces with 2,720 actual hours of direct labor. Normal
capacity is 3,220 hours. Actual overhead was $20,400.
(a)
Compute the controllable and volume overhead variances. Identify whether each variance is favorable or unfavorable. (Round
rate values to 2 decimal places, e.g. 2.75 and final answers to O decimal places, e.g. 5,275.)
Controllable Overhead Variance
Overhead Volume Variance
$
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