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10,000 units
15,000 hours
$180,000
9,000 units
14,000 hours
$171,000
Before starting the solutions, try to get some basic #s ready that you
will need anyway: First look for actual cost, given in red, also actual
hours are given in bold blue.
Next you need BQ and BR: Notice that the question says that the
company planned to use 15,000 hours for 10,000 units, so how many
hours per unit? 15,000/10,000=1.5 hour per unit. NOW comes the
most crucial part- flexing this number for actual output. Given that the
company actually made only 9,000 units, how many hours would the
flexible budget have? 9000 units X 1.5 hour allowed per unit=13,500
hours.
Similarly, if they allowed 180,000 for 15,000 hours, the rate per hour
must be 180,000/15,000Hours = $12?hour. Now you have BQ* and
BR ready.
1. What is the flexible-budget amount for variable manufacturing overhead?
A) $162,000
B) $171,000
C) $190,000
D) None of these answers is correct.
Answer: A
Explanation: Flexible budget = Budgeted input quantity allowed for
Answer: B
Not to confuse you, but there is another way to get to the correct #s in
this problem: Since the company allows 180,000 for 10,000 units,
how much would be allowed for actual output of 9,000 units?
180,000/10,000 X 9,000= 162,000. So you can solve both the
problems using this method, but wil get into trouble if the question
asked for Spending and efficiency Var. Since then you would need
BR, which is not apparent in this method of solving but is clear in the
first method.
Can you calculate Spending and Efficiency Var. For this problem?
Sebastian Company, which manufactures electrical switches, uses a standard cost system
and carries all inventories at standard. The standard manufacturing overhead costs per
switch are based on direct labor hours and are shown below:
Variable overhead (5 hours @ $12 per direct manufacturing labor hour) $ 60
Fixed overhead (5 hours @ $15* per direct manufacturing labor hour)
75
Total overhead per switch
$135
*Based on capacity of 200,000 direct manufacturing labor hours per month.
The following information is available for the month of December:
46,000 switches were produced although 40,000 switches were scheduled to be
produced. 225,000 direct manufacturing labor hours were worked
at a total cost of $5,625,000. Variable manufacturing overhead costs
for Variable and $15 per hour for fixed), unlike the first problem
where total #s were given and you had to calculate the rate.
. Now you have BQ* and BR ready.
AQ X AR
AQ X BR
BQ* X BR
225,000 HRS X AR
225,000 X $12
230,000 X $12
= 2750,000
= 2700,000
2760,000
$2,700,000
2,750,000
$ 50,000 U
230,000
225,000
5,000 $12 = $60,000 F
d. $110,000 F.
5.
ACTUAL
STATIC
APPLIED
3050,000
3000,000
230,000 X $15= 3450,000
Budgeted fixed OH 200,000 DLH $15/DLH =
Actual fixed OH
FOH Spending variance
$3,000,000
3,050,000
50,000 U
This problem wants to know how much total MOH was applied. since
you know that fixed applied is hours allowed for actual output times
the BR, you can use the same logic for variable costs too:
230,000 (15 + 12) = $6,210,000
Answer the following questions using the information below:
Roberson Corporation manufactured 30,000 ice chests during September. The overhead cost-allocation
base is $11.25 per machine-hour. The following variable overhead data pertain to September:
Production
Machine-hours
Variable overhead cost per machine-hour:
Actual
30,000 units
15,000 hours
$11.00
Budgeted
24,000 units
10,800 hours
$11.25
BY NOW, YOU SHOULD KNOW THIS REALLY WELL: YOU ONLY NEED TO
CALCULATE BQ*: IF THE COMPANY ALLOWED 10,800 HOURS FOR 24,000
UNITS, HOW MUCH WILL BE ALLOWED FOR 30,000 UNITS?
(10,800/24,000) X 30,000 = 13,500 HOURS
AQ X AR
AQ X BR
15,000 X $11.25
= 168,750
BQ* X BR
13,500 X $11.25
=151,875
Answer: B
Explanation: B) 30,000 (10,800/24,000) $11.25 = $151,875
9.
Answer: B
Explanation: B) 168,750 151, 875=
[15,000 - (30,000 10,800/24,000) mh] $11.25 = $16,875 unfavorable
10.