MANAGERIAL ACCOUNTING (CUSTOM LL)
17th Edition
ISBN: 9781264294633
Author: Garrison
Publisher: MCG
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Chapter 10.A, Problem 9P
PROBLEM 10A-9 Applying Overhead; Overhead Variances LO10-3, LO10-4
Chdczuk, S.A, of Gdansk Poland, is a major producer of classic Polish sausage. The company uses a
Management would like to determine the cause of the $ 15,400 underapplied overhead.
- Compute the predetermined overhead rate. Break the rate down into variable and fixed cost elements.
- Show how the $272,000 Applied figure in the Manufacturing Overhead account was computed.
- Breakdown the $15,400 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. - Explain the meaning of each variance that you computed in (3) above.
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Students have asked these similar questions
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…
Problem 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)
Exercise 3 (Labor and Variable Overhead Variances)
Halliwell Audio, Inc., manufactures military-specification compact discs.
The company uses standards to control its costs. The labor standards that
have been set for one disc are as follows:
Standard Hours
Standard Cost
P2.40
Standard Rate per Hour
24 minutes
P6.00
During July, 8,500 hours of direct labor time were recorded to make 20,000
discs. The direct labor cost totaled P49,300 for the month.
Required:
1. What direct labor cost should have been incurred to make the 20,000
discs? By how much does this differ from the cost that was incurred?
2. Break down the difference in cost from (1) above into a labor rate
variance and a labor efficiency variance.
3. The budgeted variable manufacturing overhead rate is P4 per direct
labor-hour. During July, the company incurred P39,100 in variable
manufacturing overhead cost. Compute the variable overhead spending
and efficiency variances for the month.
Chapter 10 Solutions
MANAGERIAL ACCOUNTING (CUSTOM LL)
Ch. 10.A - EXERCISE 10A-1 Fixed Overhead Variances LO10-4...Ch. 10.A - EXERCISE 10A-2 Predetermined Overhead Rate;...Ch. 10.A - Prob. 3ECh. 10.A - EXERCISE 10A-4 Fixed Overhead Variances LO10-4...Ch. 10.A - EXERCISE 10A5 Using Fixed Overhead Variances LO104...Ch. 10.A - EXERCISE 10A-6 Predetermined Overhead Rate LO10-4...Ch. 10.A - EXERCISE 10A-7 Relations Among Fixed Overhead...Ch. 10.A - Prob. 8PCh. 10.A - PROBLEM 10A-9 Applying Overhead; Overhead...Ch. 10.A - PROBLEM 10A-10 Comprehensive Standard Cost...
Ch. 10.A -
PROBLEM 10A-11 Comprehensive Standard Cost...Ch. 10.A - Prob. 12PCh. 10.B - EXERCISE 10B-1 Standard Cost Flows; Income...Ch. 10.B - Prob. 2ECh. 10.B - Prob. 3ECh. 10.B - Prob. 4ECh. 10.B - Prob. 5PCh. 10.B - Prob. 6PCh. 10 - Prob. 1QCh. 10 - Why are separate price and quantity variances...Ch. 10 - 10-3 Who is generally responsible for the...Ch. 10 - The materials price variance can be computed at...Ch. 10 - 10-5 If the materials price variance is favorable...Ch. 10 - Prob. 6QCh. 10 - Prob. 7QCh. 10 - 10-8 What effect, if any, would you expect...Ch. 10 - 10-9 If variable manufacturing overhead is applied...Ch. 10 - 10-10 Why can undue emphasis on labor efficiency...Ch. 10 -
The Excel worksheet form that appears below is to...Ch. 10 - Prob. 2AECh. 10 - Prob. 1F15Ch. 10 - Prob. 2F15Ch. 10 - Prob. 3F15Ch. 10 - Prob. 4F15Ch. 10 - Prob. 5F15Ch. 10 - Prob. 6F15Ch. 10 - Prob. 7F15Ch. 10 - Prob. 8F15Ch. 10 - Prob. 9F15Ch. 10 - Preble Company manufactures one product. Its...Ch. 10 - Prob. 11F15Ch. 10 - Prob. 12F15Ch. 10 - Prob. 13F15Ch. 10 - Prob. 14F15Ch. 10 - Prob. 15F15Ch. 10 - EXERCISE 10-1 Direct Materials Variances LO10-1...Ch. 10 -
EXERCISE 10-2 Direct Labor Variances...Ch. 10 -
EXERCISE 10–3 Variable Overhead Variances...Ch. 10 - EXERCISE 10-4 Direct Labor and Variable...Ch. 10 -
EXERCISE 10-5 Working Backwards from Labor...Ch. 10 - EXERCISE 10-6 Direct Materials and Direct Labor...Ch. 10 - EXERCISE 10-7 Direct Materials Variances LOIO-1...Ch. 10 -
EXERCISE 10-8 Direct Materials and Direct Labor...Ch. 10 -
PROBLEM 10-9 Comprehensive Variance Analysis...Ch. 10 -
PROBLEM 10-10 Multiple Products, Materials, and...Ch. 10 - PROBLEM 10-11 Direct Materials and Direct Labor...Ch. 10 - PROBLEM 10-12 Variance Analysis in a...Ch. 10 - Prob. 13PCh. 10 - Prob. 14PCh. 10 - PROBLEM 10-15 Comprehensive Variance Analysis...Ch. 10 - Prob. 16PCh. 10 - Prob. 17C
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