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Lynwood Company produces surge protectors. To help control costs, Lynwood employs a standard costing system and uses a flexible budget to predict overhead costs at various levels of activity. For the most recent year, Lynwood used a standard overhead rate of $18 per direct labor hour. The rate was computed using practical activity. Budgeted overhead costs are $396,000 for 18,000 direct labor hours and $540,000 for 30,000 direct labor hours. During the past year Lynwood generated the following data: (a) Actual production: 100,000 units: (b) Fixed overhead volume variance: $20,000 U; (c) Variable overhead efficiency variance: $18,000 F ; (d) Actual fixed overhead costs: $200,000; and (e) Actual variable overhead costs: $310,000. Required: 1. Calculate the fixed overhead rate. 2. Determine the fixed overhead spending variance. 3. Determine the variable overhead spending variance. 4. Determine the standard hours allowed per unit of product.

BuyFind

Managerial Accounting: The Corners...

7th Edition
Maryanne M. Mowen + 2 others
Publisher: Cengage Learning
ISBN: 9781337115773
BuyFind

Managerial Accounting: The Corners...

7th Edition
Maryanne M. Mowen + 2 others
Publisher: Cengage Learning
ISBN: 9781337115773

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Chapter
Section
Chapter 10, Problem 75P
Textbook Problem

Lynwood Company produces surge protectors. To help control costs, Lynwood employs a standard costing system and uses a flexible budget to predict overhead costs at various levels of activity. For the most recent year, Lynwood used a standard overhead rate of $18 per direct labor hour. The rate was computed using practical activity. Budgeted overhead costs are $396,000 for 18,000 direct labor hours and $540,000 for 30,000 direct labor hours. During the past year Lynwood generated the following data: (a) Actual production: 100,000 units: (b) Fixed overhead volume variance: $20,000 U; (c) Variable overhead efficiency variance: $18,000 F; (d) Actual fixed overhead costs: $200,000; and (e) Actual variable overhead costs: $310,000.

Required:

  1. 1. Calculate the fixed overhead rate.
  2. 2. Determine the fixed overhead spending variance.
  3. 3. Determine the variable overhead spending variance.
  4. 4. Determine the standard hours allowed per unit of product.

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Chapter 10 Solutions

Managerial Accounting: The Cornerstone of Business Decision-Making
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