Manufacturing overhead, variance analysis. (30-40 minutes)

Mondragon, SA, assembles its CardioX product at its Toledo plant.

Manufacturing overhead (both variable and fixed) is allocated to each CardioX unit using budgeted assembly-time hours. Budgeted assembly time per CardioX product is 2 hours. The budgeted variable manufacturing overhead cost per assembly time hour is Pta 4,000. The budgeted number of CardioX units to be assembled in March 2000 is 8,000.

Budgeted fixed manufacturing overhead costs are Pta 48,000,000.

Actual variable manufacturing overhead costs for March 2000 were Pta 61,050,000 for 7,400 units actually assembled. Actual assembly-time hours were 16,280. Actual fixed manufacturing overhead costs were Pta 50,342,000.

REQUIRED Conduct a 4-variance analysis (Exhibit 16-3) for Mondragon’s Toledo plant.

Comment on the results in requirement 1.

How does the planning and control of variable manufacturing overhead costs differ from that of fixed manufacturing overhead costs? hy8