Problem You brought your work home one evening and your neph

Problem You brought your work home one evening, and your nephew spilled his chocolate milk shake on the variance report you were preparing. Fortunately, knowing that overhead was applied based on machine hours, you were able to reconstruct the obiterated information from the remaining data. Fill in the missing numbers below. (Hint It is helpful to solve for the unknowns in the order indicated by the letters in the following table.) Budgeted fixed overhead Actual fixed overhead Budgeted production in units Actual production in units Standard machine hours per unit of output Standard variable-overhead rate per machine hour.... Actual variable-overhead rate par machine hour Actual machine hours per unit of output Variable-overhead spending variance ariable-overhead efficiency varianoe Fixed-overhead budget variance. Fxed-overhead volume varlance Total actual overhead Total budgeted overhead (Mlexible budget) Total budgeted overhead Istatic budget). Total applied overhead 25,000 12,500 4 hours 36,000u $ 96,000F $7,500 U $356,500 408,000 Step-by-step solution Ask an expert

Solution

ANswer:-

A- Actual fixed overhead - Budgeted fixed overhead = Fixed overhead spending variance/ budget variance

so actual fixed overhead - $25,000 = 7500 ( as unfavorable variance means positive figure)

total actual overhead =

actual fixed overhead variance = 7500+25000 = $32,500

total actual overhead = $ 356,500

fixed overhead = $ 32,500

therefore variable overhead will be = 356500-32500 = $324,000

B- Actual variabe overhead rate per machine hour

actual variable overhead = $ 324,000

variable overhead spending variance = ( actual hour * actual rate ) - (actual hour * standard rate )

= actual overhead - standard overhead

$ 36,000 unfavorable that means actual overhead is exess of 36,000 so

standard overhead cost = 324,000 - 36000 = $288,000

Standard variable ovehead rate per hour of machine = $ 8

so no of machine hours = 288,000 / 8 = 36,000 hours

Variable overhead efficiency variance = SR × (AH – SH)

$96,000 = favorable that means actual hour is lesser than standard hour

standard rate = $ 8.00 per hour X (36000 - actual hour ) = $96,000 ( the formula is written diffrently because we have a favourable variance or else we cn write this as

$8.00 X ( actual hour - 36,000) = $ -96,000

so we have 36000- actual hour = 96000 / 8

= 36000 - actual hour = 12000

actual hour = 36000-12000 = 24000 hours

so actual variable overhead rate per machine hour = 324,000 / 24000 = $13.50 per machine hour

C- actual Unit of Production :-

actual hours of work = 24,000 hours

standard hours worked = 36,000 hours

standard machine hour required for one unit = 4 hours per unit =

36000 / 4 = 9000 units actual production.

d. actual machine hour per unit =

total hours required = 24,000

total units produced = 9000

rate = 24000 / 9000 = 2.67 per machine hour for one unit of production.

E. Total budgeted overhead Flexible for 9000 units

budgeted fixed overhead + budgeted variable overhead ( units * machine hour per unit * machine rate )

= 25000 + (9000 * 4* 8 )

= 25000+ 288000 =$ 313,000

f. Total budgeted overhead = static for 12500 units.

budgeted fixed overhead + budgeted variable overhead ( units * machine hour per unit * machine rate )

= 25000 + (12500 * 4 * 8 )

= 25000 + 400000 = $ 425,000

G. Fixed overhead volume variance =

Absorbed/Applied overhead - Budgeted fixed overhead

Total applied overhead = 408000.

Fixed overhead applied = 408000 - 324000 = $84000

volume variance =

84000 - 25000 = 59,000 ( favorable )