Concept explainers
The information shown below was taken from the annual
Variable manufacturing overhead costs | $34,650 |
Fixed manufacturing overhead costs | $19,800 |
Normal production level in labor hours | 16,500 |
Normal production level in units | 4,125 |
Standard labor hours per unit | 4 |
During the year, 4,050 units were produced, 16,100 hours were worked, and the actual manufacturing overhead was $55,500. Actual fixed manufacturing overhead costs equaled budgeted fixed manufacturing overhead costs. Overhead is applied on the basis of direct labor hours.
Instructions
(a) Compute the total, fixed, and variable predetermined manufacturing overhead rates.
(b) Compute the total, controllable, and volume overhead variances.
(c) - Briefly interpret the overhead controllable and volume variances computed in (b).
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