Problem 11A–10 (45 minutes)
1.
£31,500 + £72,000
Total rate: =£5.75 per MH
18,000 MHs
£31,500
Variable element: =£1.75 per MH
18,000 MHs
£72,000
Fixed element: =£4.00 per MH
18,000 MHs
2. 16,000 standard MHs × £5.75 per MH = £92,000
3. Variable manufacturing overhead variances:
Standard Hours Allowed
for Actual Output,
at Standard Rate
(SH × SR)
Actual Hours of Input,
at Standard Rate
(AH × SR)
Actual Hours of Input,
at Actual Rate
(AH × AR)
16,000 MHs ×
£1.75 per MH
= £28,000
15,000 MHs ×
£1.75 per MH
= £26,250
£26,500
Variable overhead
efficiency variance
= £1,750 F
Variable overhead
rate variance
= £250 U
Alternative solution:
Variable overhead efficiency variance = SR (AH – SH)
= £1.75 per MH (15,000 MHs – 16,000 MHs)
Problem 11A–11 (continued)
Alternative solution:
Variable overhead efficiency variance = SR (AH – SH)
= $2.00 per DLH (35,000 DLHs – 33,000 DLHs)
( )
( )
Fixed Portion of
Volume Denominator Standard Hours
= the Predetermined –
Variance Hours Allowed
Overhead Rate
= $6 per DLH 30,000 DLHs – 33,000 DLHs
= $18,000 F
Budget Actual Fixed Flexible Budget Fixed
= –
Variance Overhead Cost Overhead Cost
= $1,000 U
Problem 11A–12 (continued)
Alternative solution:
( )
Fixed Portion of
Volume Denominator Standard Hours
= the Predetermined –
Variance Hours Allowed
Overhead Rate