Concept explainers
1
Predetermined overhead rate, break the rate down into variables and fixed cost elements.
Introduction: Overhead means the ongoing business expenses which are not directly incurred while producing product or service. Overhead is important while preparing budget but it is also used to determine the amount company must charge in order to incur profit.
2
Show applied figures of $272,000 Manufacturing overhead account
Introduction: Overhead means the ongoing business expenses which are not directly incurred while producing product or service. Overhead is important while preparing budget but it is also used to determine the amount company must charge in order to incur profit.
3
Analysis of $15,400 under applied overhead figure into variable overhead rate, efficiency variance, the fixed overhead budget and volume variances
Introduction: Overhead means the ongoing business expenses which are not directly incurred while producing product or service. Overhead is important while preparing budget but it is also used to determine the amount company must charge in order to incur profit.
4
Explanation of variable overhead variance, variable overhead efficiency variance,
Introduction: Overhead means the ongoing business expenses which are not directly incurred while producing product or service. Overhead is important while preparing budget but it is also used to determine the amount company must charge in order to incur profit.
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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…arrow_forwardA company, which uses standard costing, manufactures a single product with the following cost card: Standard Direct Labor Hours allowed per unit of product 4.5 DLHS Standard Direct Labor Rate Selected results for the most recent period are: Budgeted Production Actual Production Actual Direct Labor Cost Actual Direct Labor Hours Labor Rate Variance Labor Spending Variance What is the Labor Rate Variance? 2,200 units 2,500 units $ 125,000 S 11,700 hours ? 4,150 Favorable ?per DLHarrow_forwardRequired information [The following information applies to the questions displayed below.] Preble Company manufactures one product. Its variable manufacturing overhead is applied to production based on direct labor-hours and its standard cost card per unit is as follows: Direct materials: 4 pounds at $10 per pound Direct labor: 2 hours at $16 per hour Variable overhead: 2 hours at $6 per hour $ 40 32 12 Total standard cost per unit $ 84 The planning budget for March was based on producing and selling 30,000 units. However, during March the company actually produced and sold 34,500 units and incurred the following costs: a. Purchased 150,000 pounds of raw materials at a cost of $9.20 per pound. All of this material was used in production. b. Direct laborers worked 62,000 hours at a rate of $17 per hour. c. Total variable manufacturing overhead for the month was $390,600. 2. What raw materials cost would be included in the company's flexible budget for March? Raw material costarrow_forward
- Required information [The following information applies to the questions displayed below.] Preble Company manufactures one product. Its variable manufacturing overhead is applied to production based on direct labor-hours and its standard cost card per unit is as follows: Direct materials: 4 pounds at $10 per pound Direct labor: 2 hours at $16 per hour Variable overhead: 2 hours at $6 per hour $ 40 32 12 Total standard cost per unit $ 84 The planning budget for March was based on producing and selling 30,000 units. However, during March the company actually produced and sold 34,500 units and incurred the following costs: a. Purchased 150,000 pounds of raw materials at a cost of $9.20 per pound. All of this material was used in production. b. Direct laborers worked 62,000 hours at a rate of $17 per hour. c. Total variable manufacturing overhead for the month was $390,600. 11. What is the labor spending variance for March? (Indicate the effect of each variance by selecting "F" for…arrow_forwardRequired INformation [The following information applies to the questions displayed below.] Preble Company manufactures one product. Its variable manufacturing overhead is applied to production based on direct labor-hours and its standard cost card per unit is as follows: Direct materials: 4 pounds at $10 per pound Direct labor: 2 hours at $16 per hour Variable overhead: 2 hours at $6 per hour $ 40 32 12 Total standard cost per unit $ 84 The planning budget for March was based on producing and selling 30,000 units. However, during March the company actually produced and sold 34,500 units and incurred the following costs: a. Purchased 150,000 pounds of raw materials at a cost of $9.20 per pound. All of this material was used in production. b. Direct laborers worked 62,000 hours at a rate of $17 per hour. c. Total variable manufacturing overhead for the month was $390,600. 4. What is the materials quantity variance for March? (Indicate the effect of each variance by selecting "F" for…arrow_forwardRequired INformation [The following information applies to the questions displayed below.] Preble Company manufactures one product. Its variable manufacturing overhead is applied to production based on direct labor-hours and its standard cost card per unit is as follows: Direct materials: 4 pounds at $10 per pound Direct labor: 2 hours at $16 per hour Variable overhead: 2 hours at $6 per hour $ 40 32 12 Total standard cost per unit $ 84 The planning budget for March was based on producing and selling 30,000 units. However, during March the company actually produced and sold 34,500 units and incurred the following costs: a. Purchased 150,000 pounds of raw materials at a cost of $9.20 per pound. All of this material was used in production. b. Direct laborers worked 62,000 hours at a rate of $17 per hour. c. Total variable manufacturing overhead for the month was $390,600. 6. If Preble had purchased 177,000 pounds of materials at $9.20 per pound and used 150,000 pounds in production, what…arrow_forward
- Cricket Inc. uses a standard cost accounting system and applies manufacturing overhead based on machine hours. The machine hour quantity standard is 25 hours per unit. Here are data regarding the current year: Units produced Manufacturing overhead costs: • Fixed overhead Variable overhead Total overhead . B O Actual machine hours O Standard machine hours allowed O Standard cost allowed O No additional information is required Planning budget 1,200 units What additional information is required to compute both the variable manufacturing overhead rate and efficiency variances? O None of the above $1,414,500 $1,728,000 $3,142,500 Actual results 1,056 units $1,460,000 $1,621,600 $3,081,600arrow_forwardProblem 4. NEW JERSEY CORP. uses a standard cost system in which manufacturing overhead is applied to units of product on the basis of direct labor-hours. The company's total budgeted variable and fixed manufacturing overhead costs at the denominator level of activity are P20,000 for variable overhead and P30,000 for fixed overhead. The predetemined overhead rate, including both fixed and variable components, is P2.50 per direct labor-hour. The standards call for two direct labor-hours per unit of output produced. Last year, the company produced 11,500 units of product and worked 22,000 direct labor-hours. Actual costs were P22,500 for variable overhead and P31,000 for fixed overhead. (d) What was the variable overhead efficiency variance? (e) What was the fixed overhead budget variance? What was the fixed overhead volume variance? (f)arrow_forwardRequired information [The following information applies to the questions displayed below.] Preble Company manufactures one product. Its variable manufacturing overhead is applied to production based on direct labor-hours and its standard cost card per unit is as follows: Direct materials: 4 pounds at $10 per pound Direct labor: 2 hours at $16 per hour $ 40 32 Variable overhead: 2 hours at $6 per hour 12 Total standard cost per unit $ 84 The planning budget for March was based on producing and selling 30,000 units. However, during March the company actually produced and sold 34,500 units and incurred the following costs: a. Purchased 150,000 pounds of raw materials at a cost of $9.20 per pound. All of this material was used in production. b. Direct laborers worked 62,000 hours at a rate of $17 per hour. c. Total variable manufacturing overhead for the month was $390,600. 10. What is the labor efficiency variance for March? (Indicate the effect of each variance by selecting "F" for…arrow_forward
- Manufacturing overhead data for the production of Product H by Shakira Company, assuming the company uses a standard cost system, are as follows. Overhead incurred for 46,000 actual direct labor hours worked $373,200 Overhead rate (variable $7; fixed $1) at normal capacity of 50,700 direct labor hours $8 Standard hours allowed for work done 46,750 Compute the total overhead variance. Total overhead variance $enter the total overhead variance in dollars select an option Neither favorable nor unfavorableFavorableUnfavorablearrow_forwardRequired information [The following information applies to the questions displayed below.] A manufactured product has the following information for June. Standard Quantity and Cost 6 pounds @ $8 per pound 3 DLH @ $16 per DLH 3 DLH @ $12 per DLH Direct materials Direct labor Overhead Units manufactured (1) Prepare the standard cost card showing standard cost per unit. (2) Compute total budgeted cost for June production. (3) Compute total actual cost for June production. (4) Compute total cost variance for June. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Direct materials Direct labor Overhead Total Required 3 Prepare the standard cost card showing standard cost per unit. $ Required 4 Actual Results 46,100 pounds @ $8.20 per pound 22,500 hours @ $16.50 per hour $ 278,600 7,600 units < Required 1 Required 2arrow_forwardSolve Sub parts: Direct labor efficiency (quantity) var.$________U F and all journals STANDARD COST SYSTEM: VARIANCES AND ENTRIES: Company B uses a standard cost system to control manufacturing costs. All expenditures were on account. Standards to produce one unit of finished product: Direct materials: 2 lbs. @ $8.00 per lb. Direct labor: 6 hours at $20.00 per hour Actual results: Actual production: 62,000 units Actual materials purchased: 130,000 lbs. @ $8.20 per lb. Actual materials used: 125,000 lbs Actual direct labor usage: 370,000 hours Actual direct labor costs: $ 7,585,000 REQUIRED: COMPUTE (must show calculations) and indicate whether favorable (F) or unfavorable…arrow_forward
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