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Solutions Manual, Chapter 10 51
Case 10-17 (60 minutes)
1. The number of units produced can be computed by using the total
standard cost applied for the period for
any
input—direct materials,
direct labor, or variable manufacturing overhead. Using the standard
cost applied for direct materials, we have:
6. Standard variable overhead cost applied $54,000
Case 10-17 (continued)
Direct materials analysis:
A
ctual Quantity of
Inputs, at Actual
Price
A
ctual Quantity
of Inputs, at
Standard Price
Standard Quantity
Allowed for Output,
at Standard Price
(AQ ×
A
P) (AQ × SP) (SQ × SP)
v
A
A
v
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Solutions Manual, Chapter 10 53
Case 10-17 (continued)
Variable overhead analysis:
Actual Hours of Input,
at the Actual Rate
A
ctual Hours of
Input, at the
Standard Rate
Standard Hours
Allowed for Output,
at the Standard Rate
(AH ×
A
R) (AH × SR) (SH × SR)
–
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54 Managerial Accounting, 16th Edition
Appendix 10A
Predetermined Overhead Rates and Overhead
Analysis in a Standard Costing System
Exercise 10A-1 (15 minutes)
1. Fixed overhead
Fixed portion of the =
predetermined overhead rate Denominator level of activity
2. Bud
g
et Actual fixed Bud
g
eted fixed
= –
variance overhead overhead
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Solutions Manual, Appendix 10A 55
Exercise 10A-2 (20 minutes)
1. $3 per MH × 60,000 MHs + $300,000
Predetermined =
overhead rate 60,000 MHs
Fixed portion of $300,000
the predetermined = 60,000 MHs
overhead rate
2. The standard hours per unit of product are:
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56 Managerial Accounting, 16th Edition
Exercise 10A-2 (continued)
3. Variable overhead rate variance:
Variable overhead rate variance = (AH × AR) – (AH × SR)
The fixed overhead variances are as follows:
A
ctual Fixed
Overhead
Bud
g
eted Fixed
Overhead
Fixed Overhead Applied to
Work in Process
g
v
v
Alternative approach to the budget variance:
Bud
g
et Actual fixed Bud
g
eted fixed
= –
variance overhead overhead
Alternative approach to the volume variance:
÷
÷
÷
÷
÷
ø
æ
ö
÷
Fixed portion of Standard
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Solutions Manual, Appendix 10A 57
Exercise 10A-3 (15 minutes)
1. The total overhead cost at the denominator level of activity must be
determined before the predetermined overhead rate can be computed.
Overhead at the denominator level of activity
Predetermined =
overhead rate Denominator level of activity
2. Standard direct labor-hours allowed for
the actual output (a) …………………….. 38,000 DLHs
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58 Managerial Accounting, 16th Edition
Exercise 10A-4 (10 minutes)
Company A:
T
his company has a favorable volume variance because the
Company B:
T
his company has an unfavorable volume variance because
Company C:
T
his company has no volume variance because the standard
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Solutions Manual, Appendix 10A 59
Exercise 10A-5 (15 minutes)
1. 9,500 units × 4 hours per unit = 38,000 hours.
2. and 3.
A
ctual Fixed
Overhead
Bud
g
eted Fixed
Overhead
Fixed Overhead Applied to
Work in Process
4.
Budgeted fixed overhead
Fixed element of the =
predetermined overhead rate Denominator activity
g
v
v
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60 Managerial Accounting, 16th Edition
Exercise 10A-6 (15 minutes)
1.
T
otal overhead at the
denominator activity
Predetermined =
overhead rate Denominator activity
2.
Standard
Quantity or
Hours
Standard
Price or
Rate
Standard
Cost
Direct materials ………….. 2.5 yards $8.60 per yard $21.50
Direct labor ……………….. 3.0 hours* $12.00 per hour3 36.00
V
ariable manufacturin
g
T