Requirements 1. Prepare a graph for fixed manufacturing overhead. The graph should display how Clean-It-Up, Inc.'s fixed manufacturing overhead costs will be depicted for the purposes of (a) planning and control and (b) inventory costing. 2. Suppose that 850,000 machine-hours were allowed for actual output produced in 2020, but 925,000 actual machine-hours were used. Actual manufacturing overhead was $7,862,500, variable, and $18,100,000, fixed. Compute (a) the variable manufacturing overhead spending and efficiency variances and (b) the fixed manufacturing overhead spending and production-volume variances. 3. What is the amount of the under- or overallocated variable manufacturing overhead and the under- or overallocated fixed manufacturing overhead? Why are the flexible-budget variance and the under- or overallocated overhead amount always the same for variable manufacturing overhead but rarely the same for fixed manufacturing overhead? 4. Suppose the denominator level was 750,000 rather than 1,000,000 machine-hours. What variances in requirement 2 would be affected? Recompute them.
Requirements 1. Prepare a graph for fixed manufacturing overhead. The graph should display how Clean-It-Up, Inc.'s fixed manufacturing overhead costs will be depicted for the purposes of (a) planning and control and (b) inventory costing. 2. Suppose that 850,000 machine-hours were allowed for actual output produced in 2020, but 925,000 actual machine-hours were used. Actual manufacturing overhead was $7,862,500, variable, and $18,100,000, fixed. Compute (a) the variable manufacturing overhead spending and efficiency variances and (b) the fixed manufacturing overhead spending and production-volume variances. 3. What is the amount of the under- or overallocated variable manufacturing overhead and the under- or overallocated fixed manufacturing overhead? Why are the flexible-budget variance and the under- or overallocated overhead amount always the same for variable manufacturing overhead but rarely the same for fixed manufacturing overhead? 4. Suppose the denominator level was 750,000 rather than 1,000,000 machine-hours. What variances in requirement 2 would be affected? Recompute them.
Chapter4: Job Order Costing
Section: Chapter Questions
Problem 11PB: When setting its predetermined overhead application rate. Tasty Turtle estimated its overhead would...
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Clean−It−Up, Inc., is a manufacturer of vacuums and uses standard costing . Manufacturing overhead (both variable and fixed) is allocated to products on the basis of budgeted machine-hours. In
2020, budgeted fixed manufacturing overhead cost was$18,000,000. Budgeted variable manufacturing overhead was $8 per machine-hour. The denominator level was 1,000,000 machine-hours.
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