(Combined overhead rates) Vancouver Production manufactures a down-filled sleeping bag with the following standard cost information for 1996: i ■ Each sleeping bag requires 3 hours of machine time to produce.

■ Variable overhead: $3 per machine hour

* Fixed overhead: $2.50 per machine hour; calculated as total budgeted over¬ head divided by expected annual capacity of 50,000 machine hours.LO1

Transcribed Image Text:

PRODUCTION STATISTICS FOR 1996 WERE: Number of sleeping bags produced Actual machine hours Variable overhead cost incurred Fixed overhead cost incurred 21,000 units 62,200 hours $189,710 $132,200 a. Using a combined overhead rate, calculate variances according to the two- variance approach. b. Using a combined overhead rate, calculate variances according to the three- variance approach.