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Problem 10A-9 (Algo) Applying Overhead; Overhead Variances [LO10-3, LO10-4] Baird Company makes Polish sausage. It applied manufacturing overhead to production based on standard direct labor-hours. According to the company's planning budget, the following manufacturing overhead costs should be incurred at an activity level c 30,000 labor-hours (the denominator activity level): Variable manufacturing overhead cost Fixed manufacturing overhead cost Total manufacturing overhead cost During the most recent year, the following operating results were recorded: Activity: Actual labor-hours worked Standard labor-hours allowed for the actual output $ 172,500 232,500 $ 405,000 Cost: Actual variable manufacturing overhead cost incurred Actual fixed manufacturing overhead cost incurred At the end of the year, the company's Manufacturing Overhead account contained the following data: Actual Debit Manufacturing Overhead 409,800 Applied 31,800 Management would like to determine the cause of the $31,800 underapplied overhead. Required: 1. Compute the predetermined overhead rate. Break the rate down into variable and fixed cost elements. 2. Show how the $378,000 Applied figure in the Manufacturing Overhead account was computed. 3. Break down the $31,800 underapplied overhead into four components: (1) variable overhead rate variance, (2) variable overhead efficiency variance, (3) fixed overhead budget variance, and (4) fixed overhead volume variance. Credit 27,000 28,000 378,000 $ 199,800 $ 210,000

Problem 10A-9 (Algo) Applying Overhead; Overhead Variances [LO10-3, LO10-4] Baird Company makes Polish sausage. It applied manufacturing overhead to production based on standard direct labor-hours. According to the company's planning budget, the following manufacturing overhead costs should be incurred at an activity level c 30,000 labor-hours (the denominator activity level): Variable manufacturing overhead cost Fixed manufacturing overhead cost Total manufacturing overhead cost During the most recent year, the following operating results were recorded: Activity: Actual labor-hours worked Standard labor-hours allowed for the actual output $ 172,500 232,500 $ 405,000 Cost: Actual variable manufacturing overhead cost incurred Actual fixed manufacturing overhead cost incurred At the end of the year, the company's Manufacturing Overhead account contained the following data: Actual Debit Manufacturing Overhead 409,800 Applied 31,800 Management would like to determine the cause of the $31,800 underapplied overhead. Required: 1. Compute the predetermined overhead rate. Break the rate down into variable and fixed cost elements. 2. Show how the $378,000 Applied figure in the Manufacturing Overhead account was computed. 3. Break down the $31,800 underapplied overhead into four components: (1) variable overhead rate variance, (2) variable overhead efficiency variance, (3) fixed overhead budget variance, and (4) fixed overhead volume variance. Credit 27,000 28,000 378,000 $ 199,800 $ 210,000

Survey of Accounting (Accounting I)
Survey of Accounting (Accounting I)
8th Edition
ISBN:9781305961883
Author:Carl Warren
Publisher:Carl Warren
Chapter13: Budgeting And Standard Costs
Section: Chapter Questions
Problem 13.5P: Direct materials and direct labor, variance analysis; factory overhead cost variance analysis Route...
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Problem 10A-9 (Algo) Applying Overhead; Overhead Variances [LO10-3, LO10-4] Baird Company makes Polish sausage. It applied manufacturing overhead to production based on standard direct labor-hours. According to the company's planning budget, the following manufacturing overhead costs should be incurred at an activity level of 30,000 labor-hours (the denominator activity level): Variable manufacturing overhead cost Fixed manufacturing overhead cost Total manufacturing overhead cost During the most recent year, the following operating results were recorded: Activity: Actual labor-hours worked Standard labor-hours allowed for the actual output Actual Cost: Actual variable manufacturing overhead cost incurred Actual fixed manufacturing overhead cost incurred At the end of the year, the company's Manufacturing Overhead account contained the following data: Manufacturing Overhead 409,800 Applied 31,800 Debit $ 172,500 232,500 $ 405,000 Credit 27,000 28,000 378,000 $ 199,800 $ 210,000 Management would like to determine the cause of the $31,800 underapplied overhead. Required: 1. Compute the predetermined overhead rate. Break the rate down into variable and fixed cost elements. 2. Show how the $378,000 Applied figure in the Manufacturing Overhead account was computed. 3. Break down the $31,800 underapplied overhead into four components: (1) variable overhead rate variance, (2) variable overhead efficiency variance, (3) fixed overhead budget variance, and (4) fixed overhead volume variance.
Transcribed Image Text:Problem 10A-9 (Algo) Applying Overhead; Overhead Variances [LO10-3, LO10-4] Baird Company makes Polish sausage. It applied manufacturing overhead to production based on standard direct labor-hours. According to the company's planning budget, the following manufacturing overhead costs should be incurred at an activity level of 30,000 labor-hours (the denominator activity level): Variable manufacturing overhead cost Fixed manufacturing overhead cost Total manufacturing overhead cost During the most recent year, the following operating results were recorded: Activity: Actual labor-hours worked Standard labor-hours allowed for the actual output Actual Cost: Actual variable manufacturing overhead cost incurred Actual fixed manufacturing overhead cost incurred At the end of the year, the company's Manufacturing Overhead account contained the following data: Manufacturing Overhead 409,800 Applied 31,800 Debit $ 172,500 232,500 $ 405,000 Credit 27,000 28,000 378,000 $ 199,800 $ 210,000 Management would like to determine the cause of the $31,800 underapplied overhead. Required: 1. Compute the predetermined overhead rate. Break the rate down into variable and fixed cost elements. 2. Show how the $378,000 Applied figure in the Manufacturing Overhead account was computed. 3. Break down the $31,800 underapplied overhead into four components: (1) variable overhead rate variance, (2) variable overhead efficiency variance, (3) fixed overhead budget variance, and (4) fixed overhead volume variance.
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