The Brown Manufacturing Companys costing system has two dire

The Brown Manufacturing Company\'s costing system has two direct-cost categories: direct materials and direct manufacturing labor. Manufacturing overhead (both variable and fixed) is allocated to products on the basis of standard direct manufacturing labor hours (DLH). At the beginning of

2014 Brown adopted the following standards for its manufacturing costs:

Direct materials

3 lbs. at $4 per lb.

$12.00

Direct manufacturing labor

4 hrs. at $20 per hr.

80.00

Manufacturing overhead:

Variable

$6 per DLH

24.00

Fixed

$7 per DLH

28.00

Standard manufacturing cost per output unit

$144.00

The denominator level for total manufacturing overhead per month in

2014 is 37,000 direct manufacturing labor-hours

Brown\'s flexible budget for January 2014

was based on this denominator level. The records for January indicated the following:

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Direct materials purchased

26,300 lb. at $3.80 per lb.

Direct materials used

23,300 lb.

Direct manufacturing labor

28,400 hrs. at $19.60 per hr.

Total actual manufacturing overhead (variable and fixed)

$500,000

Actual production

7,600 output units

Actual Input Qty.

Actual Costs

x

Flexible

Allocated

Incurred

Budgeted Price

Budget

Overhead

Variable Manuf. OH

$170,400

$182,400

$182,400

Finally, complete the table for fixed overhead.

Same Budgeted Lump

Actual Costs

Sum Regardless

Flexible

Allocated

Incurred

of Output Level

Budget

Overhead

Fixed Manuf. OH

$259,000

$259,000

$212,800

e.

The total manufacturing overhead spending variance is $

70,600

U

f.

The variable manufacturing overhead efficiency variance is $

U

Direct materials	3 lbs. at $4 per lb.		$12.00
Direct manufacturing labor	4 hrs. at $20 per hr.		80.00
Manufacturing overhead:
Variable	$6 per DLH		24.00
Fixed	$7 per DLH		28.00
Standard manufacturing cost per output unit			$144.00

Solution

Answer for subpoint e:

Formula for manufacturing overhead spending variance = Actual quantity (Standard price per hour - Actual price per hour)

=7600*$20*4 -$650,000

=$608000 -$650,000

=$42000(U).

Answer for subpoint f:

Actual manufacturing overhead for the month =$650,000.

fixed manufacturing overhead =37,000 * 7

=$ 259000

Actual variable manufacturing overhead =$650,000 -$259,000

=$ 391000

Fixed Mfg OH Table
	Actual Cost Incurred	Actual Input Qty x Budgeted Rate	Flexible Budget	Allocated OH
Fixed Mfg OH	Not Provided	$ 2,59,000.00	$     2,59,000.00	$ 2,12,800.00