)*tr* ffic”
Fianklin Company provides the fullowing infurmetion about its manufachring opaations for the
month just ended:
Acrud machine-hours usod
Budgeed mul overtead
22,W
$900,000
Actual variable overhead incurred $352,000
Actual fixed overhead incurred S575,000
Budgeted production is 200,000 units of ouput and actual production is 198,000 units of ouput.
One-tenth of a machine.hour is budgaed per unit of ouput. The budgeted fixed overhead cost
rate is S30 per mactrine-hour. The compatry uses 4-\rSriance analysis for overhead
a. Using the columnar solution format below, compute 0re variable overhed spending and 8$D,t1.l-,
efficiency variances. Indicate whether each variance is favorable or unfavorable. Use F for
favorable variances and U for unfavorable varianses.
b. Using the columnar solution format below, compute the fixed overhead spending and ‘,lt,tyuLuO
-*
production-volume variances. Indicate whether each variance is favorable or unfavorable. {” . iO
Use F for favorable variances and U for un&vorable variances.
c. .Is total overhead underallocated or overallocated? By what amount? {,rf,*,
Iv.’r, ttuS .
Flexible Budg*:
‘l1f”11′,lJJ’
Actual Coss Actual Input Actuat Output
Incurred ,x Budgeted Rate . x Budgeed Rate \
_’4{,4C;,-t ( a-a,u:v Fl’) ) [ fcl Ero;.’){ lc J” lf )
‘ 3.)CrD,\., – &(t -lrr..tv
I siP,ocn-‘u l s aictJ I
VOH spending variance VOH efficien.r r*,frij..,*,
Budgeted Input
Same Budg*ed Lump- Allowed for
Actual Costs Sum Regardless of Actual Ouput
‘ Incurred Output Level x Budgeted Rate
s liiru a]o) e,” i {t,c\nfy:J.o
1 *af;ntrl ,. Uouu I
FOH spending variance Production-volume variance
3QrlAlJ\A .
Mrdtiple choice L 3. The fo[owing information is for
Select the best answer to each question. Space is * Pappillon Corporation’s variable manu-
provided for computations after the quantitative facturing overhead costs tast month:
Actual variable overhead $73,000
Actual fixed overhead $17,000
Budgeted hours dlowed
favorable flexible{udga variance of
S3,000, unfavorable efficiency variance
of $2,500. The spending variance is:
$500 favorable.
$5,500 unfavorable.
$5,500 favorable.
mne of the above.
Static Maximum
Budset Capacity
Pcrccnt of capcity fi% l00%
lMachine’hours 3,2m 4,000
,sff) Vrrieble overtead S64,m0 $80,000
tJD-Sixedovertead $l60,0m $160,000
Faweett operated at 90% of maximum
capacity during 2002. Actual manufac-
a.
b.
9
for actual output producod 32,000
Budgaod variable overhead
cost rate per machine{our. S2.50 fi\
Budgeted fixed overhead cost ‘.U_ +. (cpA) Fawcen company prepared the
rate per madrine-hour $0.50 following information on its manufactur-
The total overhead variance is: ing operations for 2002:
a $1.000 unfavorable.
[b) oo,ooo favorable.
V $6,000 unfavorable.
d. $7,000 favorable. I
: ( 1;,d’D trloD-) ‘3+til{
h,z c1 u; [,]u -tlt , cCC = – $k ..t; . rr.4)rE-
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