=+12-21 KKK Manufacturing overhead, variance analysis OBJECTIVES 3, 4 Solutions Ltd manufactures centrifuges. Fixed and variable manufacturing overheads are allocated to each centrifuge using budgeted assembly-hours. Budgeted assembly time is two hours per unit. The following table shows the budgeted amounts and actual results related to overhead for June 2015:

1 2

3 4

5 6

A Actual results Static budget 200 411

$30.00

$12 741

$20 550 $19 200 Variable manufacturing overhead costs Fixed manufacturing overhead costs Solutions Ltd (June 2015)

Number of centrifuges assembled and sold Hours of assembly time Variable manufacturing overhead cost per hour of assembly time 216 B C D E F G Required 1 Prepare an analysis of all variable manufacturing overhead and fixed manufacturing overhead variances using the columnar approach in Figure 12-4 (p. 482).

2 Prepare journal entries for Solutions Ltd’s June 2015 variable and fixed manufacturing overhead costs and variances; write off these variances to Cost of goods sold for the quarter ending 30 June 2015.

Chapter 12: Flexible budgets, overhead cost variances and management control 495 M12_HORN3377_02_LT_C12.indd 495 2/09/13 3:50 PM 3 How does the planning and control of variable manufacturing overhead costs differ from the planning and control of fixed manufacturing overhead costs?