167) Modine Corporation has provided the following data for September.
Denominator level of activity
1,600
machine-hours
Budgeted fixed manufacturing overhead costs
$42,400
Fixed portion of the predetermined overhead rate
$26.50
per machine-hour
Actual level of activity
1,700
machine-hours
Standard machine-hours allowed for the actual output
2,000
machine-hours
Actual fixed manufacturing overhead costs
$41,740
Required:
a. Compute the budget variance for September. Show your work!
b. Compute the volume variance for September. Show your work!
178
168) Eastern Company uses a standard cost system in which manufacturing overhead is applied to
units of product on the basis of standard direct labor-hours (DLHs). The denominator activity level
is 60,000 direct labor-hours, or 300,000 units.
• A standard cost card for the company’s product follows:
Standard quantity or
hours
Standard price or
rate
Direct materials
0.25 kilogram
$16 per kilogram
Direct labor
0.20 DLH
$10 per DLH
Variable overhead
0.20 DLH
$5 per DLH
Fixed overhead
0.20 DLH
$10 per DLH
Total standard cost
• Actual data for the year follow:
Units produced and sold
330,000
Actual direct labor-hours worked
64,800
Actual variable overhead cost
$327,240
Actual fixed manufacturing overhead cost
$612,000
Required:
a. Compute the variable overhead rate and efficiency variances.
b. Compute the fixed manufacturing overhead budget and volume variances.
180
169) Berk Incorporated makes a single product—a critical part used in commercial airline seats.
The company has a standard cost system in which it applies overhead to this product based on the
standard machine-hours allowed for the actual output of the period. Data concerning the most
recent year appear below:
Budgeted (Planned) Overhead:
Budgeted variable manufacturing overhead
$84,075
Budgeted fixed manufacturing overhead
$221,730
Budgeted production (a)
15,000
units
Standard hours per unit (b)
1.90
machine-hours
Budgeted hours (a) × (b)
28,500
machine-hours
Applying Overhead:
Actual production (a)
13,000
units
Standard hours per unit (b)
1.90
machine-hours
Standard hours allowed for the actual production (a) × (b)
24,700
machine-hours
Actual Overhead and Hours:
Actual variable manufacturing overhead
$77,675
Actual fixed manufacturing overhead
$237,730
Actual hours
23,900
machine-hours
Required:
a. Compute the variable component of the company’s predetermined overhead rate.
b. Compute the fixed component of the company’s predetermined overhead rate.
c. Determine the variable overhead rate variance for the year.
d. Determine the variable overhead efficiency variance for the year.
e. Determine the fixed overhead budget variance for the year.
f. Determine the fixed overhead volume variance for the year.
170) Canel Incorporated makes a single product—an electrical motor used in many long-haul
trucks. The company has a standard cost system in which it applies overhead to this product based
on the standard machine-hours allowed for the actual output of the period. Data concerning the
most recent year appear below:
Budgeted production (a)
15,000
units
Standard hours per unit (b)
1.70
machine-hours
Budgeted hours (a) × (b)
25,500
machine-hours
Budgeted fixed manufacturing overhead
$163,965
Actual production (a)
13,000
units
Standard hours per unit (b)
1.70
machine-hours
Standard hours allowed for the actual production (a) × (b)
22,100
machine-hours
Actual fixed manufacturing overhead
$182,965
Actual hours
23,100
machine-hours
Required:
a. Determine the fixed overhead budget variance for the year.
b. Determine the fixed overhead volume variance for the year.
183
171) Hargett Incorporated makes a single product—an electrical motor used in many long-haul
trucks. The company has a standard cost system in which it applies overhead to this product based
on the standard machine-hours allowed for the actual output of the period. Data concerning the
most recent year appear below:
Budgeted (Planned) Overhead:
Budgeted variable manufacturing overhead
$45,450
Budgeted fixed manufacturing overhead
265,050
Total budgeted manufacturing overhead
$310,500
Budgeted production (a)
30,000
units
Standard hours per unit (b)
1.50
machine-hours
Budgeted hours (a) × (b)
45,000
machine-hours
Applying Overhead:
Actual production (a)
34,000
units
Standard hours per unit (b)
1.50
machine-hours
Standard hours allowed for the actual production (a) × (b)
51,000
machine-hours
Actual Overhead and Hours:
Actual variable manufacturing overhead
$68,110
Actual fixed manufacturing overhead
255,050
Total actual manufacturing overhead
$323,160
Actual hours
49,000
machine-hours
Required:
a. Determine the variable overhead rate variance for the year.
b. Determine the variable overhead efficiency variance for the year.
c. Determine the fixed overhead budget variance for the year.
d. Determine the fixed overhead volume variance for the year.
e. Determine whether overhead was underapplied or overapplied for the year and by how much.
186
172) Fabert Incorporated makes a single product—a cooling coil used in commercial refrigerators.
The company has a standard cost system in which it applies overhead to this product based on the
standard labor-hours allowed for the actual output of the period. Data concerning the most recent
year appear below:
Budgeted (Planned) Overhead:
Budgeted variable manufacturing overhead
$25,900
Budgeted fixed manufacturing overhead
$47,200
Budgeted production (a)
20,000
units
Standard hours per unit (b)
0.50
labor-hours
Budgeted hours (a) × (b)
10,000
labor-hours
Applying Overhead:
Actual production (a)
24,000
units
Standard hours per unit (b)
0.50
labor-hours
Standard hours allowed for the actual production (a) × (b)
12,000
labor-hours
Actual Overhead and Hours:
Actual variable manufacturing overhead
$27,248
Actual fixed manufacturing overhead
$34,200
Actual hours
13,100
labor-hours
Required:
a. Determine the variable overhead rate variance for the year.
b. Determine the variable overhead efficiency variance for the year.
c. Determine the fixed overhead budget variance for the year.
d. Determine the fixed overhead volume variance for the year.
173) Fenderson Incorporated makes a single product—a cooling coil used in commercial
refrigerators. The company has a standard cost system in which it applies overhead to this product
based on the standard machine-hours allowed for the actual output of the period. Data concerning
the most recent year appear below:
Budgeted (Planned) Overhead:
Budgeted variable manufacturing overhead
$129,240
Budgeted fixed manufacturing overhead
265,320
Total budgeted manufacturing overhead
$394,560
Budgeted production (a)
20,000
units
Standard hours per unit (b)
1.80
machine-hours
Budgeted hours (a) × (b)
36,000
machine-hours
Applying Overhead:
Actual production (a)
18,000
units
Standard hours per unit (b)
1.80
machine-hours
Standard hours allowed for the actual production (a) × (b)
32,400
machine-hours
The company incurred a total of $370,077 in manufacturing overhead cost during the year.
Required:
a. Compute the variable component of the company’s predetermined overhead rate.
b. Compute the fixed component of the company’s predetermined overhead rate.
c. Compute the company’s predetermined overhead rate.
d. Determine whether overhead was underapplied or overapplied for the year and by how much.
174) Hykes Corporation’s manufacturing overhead includes $4.40 per machine-hour for supplies;
$4.40 per machine-hour for indirect labor; $55,800 per period for salaries; and $58,590 per period
for depreciation.
Required:
Determine the predetermined overhead rate if the denominator level of activity is 3,100
machine-hours.
175) Stallbaumer Incorporated makes a single product–an electrical motor used in many long-haul
trucks. The company has a standard cost system in which it applies overhead to this product based
on the standard labor-hours allowed for the actual output of the period. Data concerning the most
recent year appear below:
Total budgeted manufacturing overhead
$438,360
Budgeted hours
39,000
labor-hours
Actual production (a)
35,000
units
Standard hours per unit (b)
1.30
labor-hours
Standard hours allowed for the actual production (a) × (b)
45,500
labor-hours
Total actual manufacturing overhead
$439,170
Actual hours
47,500
labor-hours
Required:
Determine whether overhead was underapplied or overapplied for the year and by how much.
Predetermined overhead rate (a)
Standard hours allowed for the actual production (b)
Manufacturing overhead applied (a) × (b)
Total actual manufacturing overhead
Manufacturing overhead underapplied or overapplied
Overapplied
176) Benoit Corporation’s manufacturing overhead includes $13.20 per machine-hour for variable
manufacturing overhead and $555,408 per period for fixed manufacturing overhead.
Required:
Determine the predetermined overhead rate for the denominator level of activity of 5,700
machine-hours.