Horngren's Accounting, The Financial Chapters, Student Value Edition Plus MyLab Accounting with Pearson eText - Access Card Package (12th Edition)
12th Edition
ISBN: 9780134642949
Author: Tracie L. Miller-Nobles, Brenda L. Mattison, Ella Mae Matsumura
Publisher: PEARSON
expand_more
expand_more
format_list_bulleted
Concept explainers
Videos
Textbook Question
Chapter 23, Problem E23.20E
Computing
1. FOH VoL Var. $3,000 U Mason Fender is a competitor of Matthews Fender from Exercise E23-19. Mason Fender also uses a
| Static budget variable overhead | $ 2,300 |
| Static budget fixed overhead | $23,000 |
| Static budget direct labor hours | 575 hours |
| Static budget number of units | 23,000 units |
| Standard direct labor hours | 0,025 hours per fender |
Mason Fender allocates manufacturing overhead to production based on standard direct labor hours. Mason Fender reported the following actual results for 2018: actual number of fenders produced, 20,000: actual variable overhead, $5,350: actual fixed overhead, $26,000: actual direct labor hours, 460
Requirements
1. Compute the overhead variances for the year variable overhead cost variance, variable overhead efficiency variance, fixed overhead cost variance, and fixed overhead volume variance.
2. Explain why the variances are favorable or unfavorable,
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
MANAGEMENT ACCOUNTING & CONTROL
STANDARD COSTS AND VARIANCE ANALYSIS
LEARNING ACTIVITY 1
Â
Â
Torres Company has established standard costs for the cabinet department, in which one size of MX cabinet is made. The standard costs of producing one of these MX cabinets are shown below:
Â
Standard Cost Card – MX Cabinet
Direct Material: Lumber 50 board ft at P 4
200
Direct Labor: 8 hours at P 10
80
Overhead Costs: Variable – 8 hrs at P5
40
                               Fixed – 8 hrs at P3
24
Total Standard Unit Cost
344
Â
During June 2018, 500 of these cabinets were produced. The cost of operations during the month are shown below. There is no work in process at the beginning and end of the month.
Â
Direct material purchased: 30,000 bf at P4.10
123,000
Direct materials used: 24,000 board ft
Â
Direct labor: 4,200 hrs at P9.50
39,900
Overhead Costs : Variable Costs
22,000
                                Fixed Costs
11,000…
Budgeted output = 15,000 unitsÂ
Budgeted hours = 12,000Â
Budgeted fixed overhead = $90,000Â
Actual fixed overhead = $100,000Â
Actual output = 18,000 unitsÂ
Actual hours = 16,000
From the above information, you are required to compute :-Â
a) Fixed overhead cost varianceÂ
b) Budget varianceÂ
c) Volume variance
PLEASE PROVIDE FULL SOLUTIONS WITH EXPLAINATIONS
Â
Prepare fully labeled variance diagrams(used in Class) for manufacturing overhead splitting them between variance and fixedÂ
Denominator level in hours
40,000
Actual output in units
21,000
Std. Variable overhead rate per machine hour
$2.80
Actual variable overhead incurred
$117,000
Actual fixed overhead incurred
$302,100
Variable overhead applied
$117,600
Variable overhead Efficiency Variance
$8,400 U
Fixed overhead budget variance
$2,100 U
Â
What is the Over/under Allocated MO for Variable MO? ______________
What is the Over/under Allocated MO for Fixed MO? ___________________
Â
Prepare journal entries that would be made at the end of each month relating to the above variances.
Chapter 23 Solutions
Horngren's Accounting, The Financial Chapters, Student Value Edition Plus MyLab Accounting with Pearson eText - Access Card Package (12th Edition)
Ch. 23 - Prob. 1QCCh. 23 - MajorNet Systems is a start-up company that makes...Ch. 23 - MajorNet Systems is a start-up company that makes...Ch. 23 - MajorNet Systems is a start-up company that makes...Ch. 23 - MajorNet Systems has budgeted three hours of...Ch. 23 - MajorNet Systems has budgeted three hours of...Ch. 23 - FrontGrade Systems allocates manufacturing...Ch. 23 - FrontGrade Systems allocates manufacturing...Ch. 23 - FrontGrade Systems allocates manufacturing...Ch. 23 - The person probably most responsible for the...
Ch. 23 - HajorNet System’s static budget predicted...Ch. 23 - What is a variance?Ch. 23 - Explain the difference between a favorable and an...Ch. 23 - What is a static budget performance report?Ch. 23 - How do flexible budgets differ from static...Ch. 23 - How is a flexible budget used?Ch. 23 - What are the two components of the static budget...Ch. 23 - What is a flexible budget performance report?Ch. 23 - What is a standard cost system?Ch. 23 - Explain the difference between a cost standard and...Ch. 23 - Give the general formulas for determining cost and...Ch. 23 - How does the static budget affect cost and...Ch. 23 - List the direct materials variances, and briefly...Ch. 23 - List the direct labor variances, and briefly...Ch. 23 - List the variable overhead variances, and briefly...Ch. 23 - List the fixed overhead variances, and briefly...Ch. 23 - How is the fixed overhead volume variance...Ch. 23 - What is management by exception?Ch. 23 - List the eight product variances and the manager...Ch. 23 - Briefly describe how journal entries differ in a...Ch. 23 - What is a standard cost income statement?Ch. 23 - Matching terms Learning Objective 1 Match each...Ch. 23 - Preparing flexible budgets Learning Objective 1...Ch. 23 - Calculating flexible budget variances Learning...Ch. 23 - Matching terms Learning Objective 2 Match each...Ch. 23 - Identifying the benefits of standard costs...Ch. 23 - Calculating materials variances Learning Objective...Ch. 23 - Calculating labor variances Learning Objective 3...Ch. 23 - Interpreting material and labor variances Learning...Ch. 23 - Computing standard overhead allocation rates...Ch. 23 - Computing overhead variances Learning Objective 4...Ch. 23 - Understanding variance relationships Learning...Ch. 23 - Journalizing materials entries Learning Objectives...Ch. 23 - Journalizing labor entries Learning Objectives 6...Ch. 23 - Preparing a standard cost income statement...Ch. 23 - Preparing a flexible budget Learning Objective 1...Ch. 23 - Preparing a flexible budget performance report...Ch. 23 - Preparing a flexible budget performance report...Ch. 23 - Defining the benefits of setting cost standards...Ch. 23 - Calculating materials and labor variances Learning...Ch. 23 - Computing overhead variances Learning Objective 4...Ch. 23 - Calculating overhead variances Learning Objective...Ch. 23 - Preparing a standard cost income statement...Ch. 23 - Preparing journal entries Learning Objective 6 MOH...Ch. 23 - Preparing a standard cost income statement...Ch. 23 - Preparing a flexible budget performance report...Ch. 23 - Preparing a flexible budget computing standard...Ch. 23 - Computing standard cost variances and reporting to...Ch. 23 - Computing and journalizing standard cost variances...Ch. 23 - Prob. P23.29APGACh. 23 - Preparing a flexible budget performance report...Ch. 23 - Preparing a flexible budget and computing standard...Ch. 23 - Prob. P23.32BPGBCh. 23 - Prob. P23.33BPGBCh. 23 - Preparing a standard cost income statement...Ch. 23 - Prob. P23.35CTCh. 23 - Preparing a flexible budget and performance report...Ch. 23 - Prob. 23.1TIATCCh. 23 - Decision Case 23-1 Suppose you manage the local...Ch. 23 - Fraud Case 23-1 Drew Castello, general manager of...
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- Lowell Manufacturing creates dynamic robots designed to clean houses. Budgeted sales were 300 units at $2,200 per unit. Actual sales were 350 units at $2,500 a unit. Lowell Manufacturing’s sales volume variances was: a) $110,000 (F) b) $15,000 (U) c) $215,000 (F) d) $15,000 (F)arrow_forwardGraphs and overhead variances. Best Around, Inc., is a manufacturer of vacuums and uses standard costing. Manufacturing overhead (both variable and xed) is allocated to products on the basis of budgeted machine-hours. In2017, budgeted xed manufacturing overhead cost was $17,000,000. Budgeted variable manufacturing overhead was $10 per machine-hour. The denominator level was 1,000,000 machine-hours.arrow_forwardFlexible budgets, 4-variance analysis. (CMA, adapted) Wilson Products uses standard costing. It allocates manufacturing overhead (both variable and fixed) to products on the basis of standard direct manufacturing labor-hours (DLH). Wilson Products develops its manufacturing overhead rate from the current annual budget. The manufacturing overhead budget for 2017 is based on budgeted output of 672,000 units, requiring 3,360,000 DLH. The company is able to schedule production uniformly throughout the year. A total of 72,000 output units requiring 321,000 DLH was produced during May 2017. Manufacturing overhead (MOH) costs incurred for May amounted to $355,800. The actual costs, compared with the annual budget and 1/12 of the annual budget, are as follows: Calculate the following amounts for Wilson Products for May 2017: Total manufacturing overhead costs allocated Variable manufacturing overhead spending variance Fixed manufacturing overhead spending variance Variable manufacturing…arrow_forward
- Overhead Variances, Four-Variance Analysis Oerstman, Inc., uses a standard costing system and develops its overhead rates from the current annual budget. The budget is based on an expected annual output of 120,000 units requiring 480,000 direct labor hours. (Practical capacity is 500,000 hours.) Annual budgeted overhead costs total $787,200, of which $556,800 is fixed overhead. A total of 119,400 units using 478,000 direct labor hours were produced during the year. Actual variable overhead costs for the year were $230,600, and actual fixed overhead costs were $556,250. Required: 1. Compute the fixed overhead spending and volume variances. Fixed Overhead Spending Variance $ Favorable Fixed Overhead Volume Variance $ Unfavorable 2. Compute the variable overhead spending and efficiency variances. Variable Overhead Spending Variance $ Unfavorable Variable Overhead Efficiency Variance $ Unfavorablearrow_forwardQuality Fender uses a standard cost system and provide the following​ information: 1​(Click the icon to view the​ information.) Quality Fender allocates manufacturing overhead to production based on standard direct labor hours. Quality Fender reported the following actual results for 2024​: actual number of fenders​ produced, 20,000​; actual variable​ overhead, $4,610​; actual fixed​ overhead, $24,000​; actual direct labor​ hours, 360.   Read the requirements2.  Requirement 1. Compute the overhead variances for the​ year: variable overhead cost​ variance, variable overhead efficiency​ variance, fixed overhead cost​ variance, and fixed overhead volume variance.  Begin with the variable overhead cost and efficiency variances. Select the required​ formulas, compute the variable overhead cost and efficiency​ variances, and identify whether each variance is favorable​ (F) or unfavorable​ (U).​(You may need to simply the formula based on the data provided. Abbreviations​ used:…arrow_forwardOverhead Application, Overhead Variances, Journal Entries ONLY LAST PART PLEASE!!! Plimpton Company produces countertop ovens. Plimpton uses a standard costing system. The standard costing system relies on direct labor hours to assign overhead costs to production. The direct labor standard indicates that two direct labor hours should be used for every oven produced. The normal production volume is 100,000 units. The budgeted overhead for the coming year is as follows: Fixed overhead $770,000 Variable overhead 444,000* *At normal volume. Plimpton applies overhead on the basis of direct labor hours. During the year, Plimpton produced 97,000 units, worked 196,000 direct labor hours, and incurred actual fixed overhead costs of $780,200 and actual variable overhead costs of $435,600. Required: 1. Calculate the standard fixed overhead rate and the standard variable overhead rate. Round your answers to the nearest cent. Use rounded answers in the subsequent computations.…arrow_forward
- Factory Overhead Variance Analysis  Sakto Company provides the following production data: Total standard overhead cost per unit of product: 6 hours at P3.00 per hour = P18.00 per unit Budgeted Fixed Factory Overhead P24,000 Normal Production 2,000 units Actual Production 2,000 units Actual Hours 8,000 hours Actual Factory Overhead incurred P24,000  Required: REQUIRED: Determine the Flexible Budget Formula Spending Variance (SV) Efficiency Variance (EV) Volume Variance (VV) Total Factory Overhead Variance (TFOV)arrow_forwardSTANDARD COST SYSTEM – MOH VARIANCES (must show calculations)  Company budgeted production level in units is 60,000 units of output with a budgeted fixed cost of $480,000 and budgeted variable cost of $348,000. Each unit requires 2 hours of direct labor. (Use T accounts to help yourself)  Actual results:            Production: 58,500 units            Direct labor hours used: 128,700            Total actual MOH costs incurred: $819,228            Total actual FIXED MOH costs incurred: $480,643  Calculate the standard (budgeted) VMOH cost per unit and per hour:   VMOH per unit: $__________________  VMOH per hour: $_________________  Calculate the standard (budgeted) FMOH cost per unit and per hour:    FMOH per unit: $___________________  FMOH per hour: $___________________  Calculate the standard VMOH allocated to production during the year and prepare journal entry:   VMOH Allocated: $_____________________   Calculate the standard FMOH allocated to…arrow_forwardHello, (Continued from an earlier email). Silverstone's production budget for July called for making 39,800 units of a single product. The firm's production standards allow one-half of a machine hour per unit produced. The fixed overhead budget for July was $35,024. Silverstone uses an absorption costing system. Actual activity and costs for July were: Units produced 36,754 Fixed overhead costs incurred $37,700 Calculate the fixed overhead volume variances for July. Do not round intermediate calculations. Fixed overhead volume variances: ??? thanks.arrow_forward
- please answer within the format by providing formula the detailed workingPlease provide answer in text (Without image)Please provide answer in text (Without image)Please provide answer in text (Without image)  Peggy's Pillows produces and sells a decorative pillow for $75.00 per unit. In the first month of operation, 2,000 units were produced and 1,750 units were sold. Actual fixed costs are the same as the amount budgeted for the month. Budgeted monthly production is 2,500 units. The production volume variance is written off to the cost of goods sold account. Other information for the month includes: Variable manufacturing costs $20.00 per unit Variable marketing costs $ 3.00 per unit Fixed manufacturing costs per month $ 17,500 Administrative expenses, all fixed $15.00 per unit 1. What is cost of goods sold using absorption costing?arrow_forwardDIRECT MATERIALS AND DIRECT LABOR VARIANCES AND JOURNAL ENTRIES (YOU MUST SHOW YOUR CALCULATIONS – NO CALCULATIONS, NO CREDIT)  The X Company manufactures widgets. It has developed the following standards per finished unit for direct materials and direct labor:                Direct materials:              5 lbs. at $5.00 per lb.                Direct labor:                      1 hour at $20.00 per hour Budgeted production in units:   20,000 units ************************************************************************************ Actual production of finished units: 21,000 units Materials purchased: 120,000 lbs. at a total cost of $630,000. Materials price variance is recognized upon purchase. Direct materials used:   102,900 lbs. Direct labor used: 21,300 hours; actual cost $422,805. CALCULATE DIRECT MATERIAL PRICE VARIANCE AND PREPARE JOURNAL ENTRY.   CALCULATE DIRECT MATERIAL EFFICIENCY (QUANTITY) VARIANCE AND PREPARE JOURNALarrow_forwardFlexible budget, direct materials, and direct manufacturing labour variances. EmeraldStatuary manufactures bust statues of famous historical figures. All statues are the same size. Each unitrequires the same amount of resources. The following information is from the static budget for 2021: Expected production and salesExpected selling price per unitTotal fixed costs 7,000 units$ 680$1,400,000 Standard quantities, standard prices, and standard unit costs follow for direct materials and direct manufacturing labour:Standard Quantity Standard Price Standard Unit CostStandard quantity Standard price Standard unit cost Direct materialsDirect manufacturing labour 10 kilograms3.7 hours $ 8 per kilogram$50 per hour $ 80$185 During 2021, actual number of units produced and sold was 4,800, at an average selling price of $720. Actualcost of direct materials used was $392,700, based on 66,000 kilograms purchased at $5.95 per kilogram.Direct manufacturing labour-hours actually used were…arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Cornerstones of Cost Management (Cornerstones Ser...AccountingISBN:9781305970663Author:Don R. Hansen, Maryanne M. MowenPublisher:Cengage Learning
Cornerstones of Cost Management (Cornerstones Ser...
Accounting
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Cengage Learning
What is variance analysis?; Author: Corporate finance institute;https://www.youtube.com/watch?v=SMTa1lZu7Qw;License: Standard YouTube License, CC-BY