Nolton Products uses standard costing. It allocates manufacturing overhead (both variable and fixed) to products on the

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Nolton Products uses standard costing. It allocates manufacturing overhead (both variable and fixed) to products on the basis of standard direct manufacturing labour-hours (DMLH). Nolton develops its manufacturing overhead rate from the current annual budget. The manufacturing overhead budget for 2015 is based on budgeted output of 720,000 units, requiring 3,600,000 DMLH. The company is able to schedule production uniformly throughout the year.
A total of 66,000 output units requiring 315,000 DMLH was produced during May 2015. Manufacturing overhead (MOH) costs incurred for May amounted to $375,000. The actual costs, compared with the annual budget and 1ˆ•12 of the annual budget, are as follows:
Nolton Products uses standard costing. It allocates manufacturing overhead (both

Required
Calculate the following amounts for Nolton Products for May 2015:
1. Total manufacturing overhead costs allocated.
2. Variable manufacturing overhead rate variance.
3. Fixed manufacturing overhead rate variance.
4. Variable manufacturing overhead efficiency variance.
5. Production-volume variance.
Be sure to identify each variance as favourable (F) or unfavourable (U).

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Cost Accounting A Managerial Emphasis

ISBN: 978-0133138443

7th Canadian Edition

Authors: Srikant M. Datar, Madhav V. Rajan, Charles T. Horngren, Louis Beaubien, Chris Graham

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