Multiple Products and Overhead Analysis (Appendix 2). Ohio Electrical Instruments manufactures three product lines used by the
Question:
Multiple Products and Overhead Analysis (Appendix 2). Ohio Electrical Instruments manufactures three product lines used by the military: electronic support devices (SD), electronic counter measure devices (CMD), and electronic counter counter measure devices (CCD). The company has one large production facility in Columbus. Most of the components are manufactured by various divisions, although a few components are purchased from outside vendors. The Assembly Department is responsible for the final assembly of all three products.
Assembly operations are labor intensive and operate under a standard cost system. Because overhead costs are driven by direct labor hours, overhead is applied to each product on that basis. The standard overhead costs for Assembly on each of the three products are as follows:
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1. How many standard direct labor hours were allowed for actual production in Assembly during the month?
2. Calculate the underapplied or overapplied overhead for the month.
3. Calculate the following overhead variances:
(a) Variable spending variance.
(b) Variable efficiency variance.
(c) Fixed spending variance.
(d) Fixed capacity variance.
4. Explain how the variable efficiency variance is related to direct labor.
5. Explain how the variable efficiency variance and the fixed capacity variance are related.
Step by Step Answer:
Managerial Accounting
ISBN: 9780538842822
9th Edition
Authors: Harold M. Sollenberger, Arnold Schneider, Lane K. Anderson