Dime Motorcycles Ltd is a company that manufactures cruiser bikes. The flexible budget of Dime Motorcycles for

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Dime Motorcycles Ltd is a company that manufactures cruiser bikes. The flexible budget of Dime Motorcycles for January is given below:Overhead costs Variable overhead Indirect materials Electricity Total variable overhead costs Fixed overhead

Standard time required to manufacture a bike is 20 machine-hours. The denominator activity has been set as 50,000 machine-hours by the company for January. The following actual data for January is provided:Number of bikes manufactured Actual machine-hours for 2,250 units Standard machine-hours allowed for 2,250Actual variable overhead costs: Indirect materials Electricity Total variable overhead costs Actual fixed

Required
1. Calculate the predetermined overhead rates for fixed overhead costs, variable overhead costs and total overhead costs.
2. Prepare a variable overhead performance report showing only efficiency variance. Compare the actual numbers with the budgeted machine-hours, which are 50,000.
3. Prepare an overhead performance report. In the report, include the spending variance for variable overhead costs and the budget variance for fixed overhead costs.
4. Determine the volume variance for Dime Motorcycles Ltd.

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Management Accounting

ISBN: 9780077185534

6th Edition

Authors: Will Seal, Carsten Rohde, Ray Garrison, Eric Noreen

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