Morton Company$$s budgeted variable manufacturing overhead is $$4\mathrm{.}50$ per direct labor$-$hour and its budgeted fixed manufacturing overhead is $$270,000$ per year.

The company manufactures a single product whose standard direct labor$-$hours per unit is $2$ hours. The standard direct labor wage rate is $$15$ per hour. The standards also allow $4$ feet of raw material per unit at a standard cost of $$8\mathrm{.}75$ per foot.

Normal $($Denominator$$ activity is $30,000$ direct labor$-$hours each year. These data are summarized in the standard cost card below:

Denominator Activity: $30,000$ DLHs

Direct materials, $4$ feet $\backslash$times $$8\mathrm{.}75$ per foot

$ $35\mathrm{.}00$

Direct labor, $2$ DLHs $\backslash$times $$15$ per DLH

$30\mathrm{.}00$

Variable overhead, $2$ DLHs $\backslash$times $$4\mathrm{.}50$ per DLH

$9\mathrm{.}00$

Fixed overhead, $2$ DLHs $\backslash$times $$9\mathrm{.}00$ per DLH

$18\mathrm{.}00$

Standard cost per unit

$ $92\mathrm{.}00$

$$ 

 

Required:

On the answer sheet, assuming $30,000$ direct labor$-$hours as the denominator level of activity, compute the predetermined overhead rate, breaking it down into variable and fixed cost elements.

Assume the company

$$ actually produces $18,000$ final units

$$ Purchases $70,000$ ft of DM at $$8\mathrm{.}65$ per ft$.$

$$ Places $68,400$ feet of DM into production.

$$ Actually works $38,000$ direct labor$-$hours at $$14$ per hour.

$$ Incurs the actual following MOH costs

Variable manufacturing overhead cost

$ $174,800$

Fixed manufacturing overhead cost

$271,600$

Total manufacturing overhead cost

$ $446,400$

$$ uses $30,000$ direct labor$-$hours $($normal activity$)$ as the denominator activity figure in

computing predetermined overhead rates.

Compute the following Variances $($show work and answers on the answers sheet$)$

$$ Direct Materials price variance.

$$ Direct Materials quantity variance

$$ Direct Labor Rate Variance

$$ Direct Labor Efficiency Variance

$$ Variable Manufacturing Overhead Rate Variance

$$ Variable Manufacturing Efficiency $($i$.$e$.$ Spending $)$ Variance.

$$ Fixed Manufacturing Overhead

$$ Fixed Manufacturing Overhead

Answer rating: 100% (QA)

To compute the predetermined overhead rate breaking it down into variable and fixed cost elements Budgeted Variable Manufacturing Overhead 450 per direct laborhour Budgeted Fixed Manufacturing Overhea... View the full answer