Dime Motorcycles Ltd is a company that manufactures cruiser bikes. The flexible budget of Dime Motorcycles for
Question:
Dime Motorcycles Ltd is a company that manufactures cruiser bikes. The flexible budget of Dime Motorcycles for January is given below:
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:
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.
Step by Step Answer:
Management Accounting
ISBN: 9780077185534
6th Edition
Authors: Will Seal, Carsten Rohde, Ray Garrison, Eric Noreen