Unlock document.
This document is partially blurred.
Unlock all pages and 1 million more documents.
Get Access
11-41
PROBLEM 11-45 (CONTINUED)
bTotal standard overhead rate
=
variable overhead rate + fixed overhead rate
cVariable-overhead spending variance
=
actual variable overhead – (actual direct-labor hours
standard variable overhead rate)
dVariable-overhead efficiency variance
=
SVR(AQ – SQ)
eFixed-overhead budget variance
=
actual fixed overhead – budgeted fixed overhead
fFixed-overhead volume variance
=
budgeted fixed overhead – applied fixed overhead
gUnderapplied variable overhead
=
actual variable overhead – applied variable overhead
Chapter 11 - Flexible Budgeting and Analysis of Overhead Costs
PROBLEM 11-45 (CONTINUED)
hOverapplied fixed overhead
=
actual fixed overhead – applied fixed overhead
jApplied variable overhead
kApplied fixed overhead
11-43
PROBLEM 11-45 (CONTINUED)
Missing amounts for case B:
1.
$4.00a per direct-labor hour
11-44
PROBLEM 11-45 (CONTINUED)
Explanatory notes for case B:
aTo find the standard variable overhead rate:
Variable-overhead efficiency variance
=
SVR(AQ – SQ)
bStandard fixed-overhead rate
cFlexible budget for variable overhead
dFlexible budget for fixed overhead
=
applied fixed overhead + volume variance
eActual variable overhead
=
applied variable overhead + spending variance + efficiency variance
fActual fixed overhead
=
budgeted fixed overhead + fixed-overhead budget variance
Chapter 11 - Flexible Budgeting and Analysis of Overhead Costs
11-45
PROBLEM 11-45 (CONTINUED)
gUnderapplied variable overhead
=
spending variance + efficiency variance
*Note that the signs cancel when adding variances of different signs.
hUnderapplied fixed overhead
=
fixed-overhead budget variance + volume variance
jActual production
=
unit per hours labordirect standard
hours labordirect allowed standard
11-46
PROBLEM 11-45 (CONTINUED)
lApplied fixed overhead
=
SQ standard fixed-overhead rate
PROBLEM 11-46 (20 MINUTES)
The purchase of the FMS could have caused the following variances:
(a)
Favorable direct-material quantity variance, due to a decrease in material waste.
Chapter 11 - Flexible Budgeting and Analysis of Overhead Costs
11-47
PROBLEM 11-47 (60 MINUTES)
2.
Actual cost of direct material per unit
=
units 6,200
$166,000 $540,000 +
5.
Standard variable-overhead rate per machine hour
=
6.
First, continue using the high-low method to determine total budgeted fixed overhead
as follows:
Total budgeted overhead at 30,000 machine hours ..................................
$1,254,000
11-48
PROBLEM 11-47 (CONTINUED)
7.
First, compute actual variable overhead as follows:
Total actual overhead ..................................................................................
$1,266,000
8.
Variable-overhead efficiency variance
=
(AH SVR) – (SH SVR)
9.
Fixed-overhead budget variance
10.
Fixed-overhead volume variance
Chapter 11 - Flexible Budgeting and Analysis of Overhead Costs
11-49
PROBLEM 11-47 (CONTINUED)
11.
Flexible budget formula, using the high-low method of cost estimation:
Total budgeted cost at 30,000 machine hours ...........................................
$2,928,000
Chapter 11 - Flexible Budgeting and Analysis of Overhead Costs
11-50
PROBLEM 11-48 (40 MINUTES)
1.
a.
Three weaknesses in Albuquerque Wood Crafts, Inc.'s monthly Bookcase
Production Performance Report are as follows:
• The report is based on a static budget. Management should use a flexible
budget that compares the same level of activity, calculating variances between
b.
Due to Sara McKinley's remarks Steve Clark is likely to:
• Feel tense and apprehensive. The timing of McKinley's remarks, immediately
before the meeting, without an opportunity for discussion and feedback, will
2.
a.
To improve the monthly performance report, management should:
Chapter 11 - Flexible Budgeting and Analysis of Overhead Costs
11-51
PROBLEM 11-48 (CONTINUED)
A revised monthly performance report based on a flexible budget is as follows:
ALBUQUERQUE WOOD CRAFTS, INC.
BOOKCASE PRODUCTION PERFORMANCE REPORT FOR NOVEMBER
Actual
Flexible
Budget
Variance
Units ........................................................................
3,000
3,000
Revenue ..................................................................
$483,000
$495,000a
$12,000 U
Variable production costs: ....................................
b.
Steve Clark should be more motivated by the revised report since it clearly shows that
11-52
PROBLEM 11-49 (35 MINUTES)
1. Calculation of variances:
Direct-material price variance
=
AQ(AP – SP)
Direct-material purchase
price variance
=
PQ(AP – SP)
The two versions of the direct-material price variance are equal because quantity
purchased equals quantity used.
Direct-material quantity variance
=
SP(AQ – SQ)
*$18.90 = $75,600 4,000
Direct-labor efficiency variance
=
SR(AH – SH)
Chapter 11 - Flexible Budgeting and Analysis of Overhead Costs
PROBLEM 11-49 (CONTINUED)
Variable-overhead spending variance
=
actual variable overhead – (AQ SVR)
Fixed-overhead budget variance
=
actual fixed overhead – budgeted fixed overhead
11-54
PROBLEM 11-50 (30 MINUTES)
1.
Variances:
a.
Variable-overhead spending variance
=
Actual variable overhead – (AQ
SVR)
b.
Variable-overhead efficiency variance
c.
Fixed-overhead budget variance
=
Actual fixed overhead – budgeted fixed overhead
d.
Fixed-overhead volume variance
=
budgeted fixed overhead – applied fixed overhead
11-55
PROBLEM 11-50 (CONTINUED)
To record actual production overhead.
To add production overhead to work in process.
PROBLEM 11-51 (60 MINUTES)
1.
Formula flexible overhead budget:
Total monthly overhead = $40,000 + $18X*
