1. Bright, Inc., is a manufacturer of vacuums and uses standard costing. Manufacturing overhead (both variable and fixed) is allocated to products on the basis of budgeted machine-hours. In 2017, budgeted fixed manufacturing overhead cost was $15,000,000. Budgeted variable manufacturing overhead was $8 per machine-hour. The denominator level was 1,000,000 machine-hours. Read the requirements Requirement 1. Prepare a graph for fixed manufacturing overhead. The graph should display how Bright, Inc.'s fixed manufacturing overhead costs will be depicted for the purposes of (a) planning and control and (b) inventory costing. (Enlarge the graph and use the tool line button displayed to draw the graph.) Fixed Manufacturing Overhead Costs Total Fixed Manufacturing $19,500,000 $18,000,000 $16,500,000 $15,000,000 $13,500,000 $12,000,000 S$10,500,000 & $9,000,000 $ $7,500,000 $6,000,000 $4,500,000 $3,000,000 $1,500,000 $07 6 400,000 800,000,200.000 Machine-Hours Requirement 2. Suppose that 925,000 machine-hours were allowed for actual output produced in 2017, but 850,000 actual machine-hours were used. Actual manufacturing overhead was $7,225,000, variable, and $14,925,000, fixed. Compute (a) the variable manufacturing overhead spending and efficiency variances and (b) the fixed manufacturing overhead spending and production-volume variances. (a) Begin by calculating the following amounts for the variable manufacturing overhead. Actual Input Actual Costs Incurred Flexible Budget Allocated Overhead Budgeted Rate Variable MOH Now compute the variable manufacturing overhead spending and efficiency variances. (Label each variance as favorable (F) or unfavorable (U).) Spending variance Efficiency variance (2) (b) Now compute the following amounts for the fixed manufacturing overhead. Same Budgeted Lump Sum Actual Costs Incurred Regardless of Output Level Flexible Budget Allocated Overhead Fixed MOH Now compute the fixed manufacturing overhead spending and production-volume variances. (Label each variance as favorable (F) or unfavorable (U).) Spending variance Production-volume variance Requirement 3. What is the amount of the under-or overallocated variable manufacturing overhead and the under-or overallocated fixed manufacturing overhead? Why are the flexible-budget variance and the under-or overallocated overhead amount always the same for variable manufacturing overhead but rarely the same for fixed manufacturing overhead? The variable manufacturing overhead is The fixed manufacturing overhead is (5) (6) by $ by $ Why are the flexible-budget variance and the under-or overallocated overhead amount always the same for variable manufacturing overhead but rarely the same for fixed manufacturing overhead? The flexible-budget variance and under- or overallocated overhead are always the same amount for variable manufacturing overhead, because the flexible-budget amount of variable manufacturing overhead and the allocated amount of . In contrast, the budgeted and allocated amounts for fixed manufacturing overhead only coincide when the (8) level. input of the allocation base for the actual output level achieved (9) the denominator Requirement 4. Suppose the denominator level was 600,000 rather than 1,000,000 machine-hours. What variances in requirement 2 would be affected? Recompute them. Begin by calculating the variable manufacturing overhead spending and efficiency variances. (Label each variance as favorable (F) or unfavorable (U).) Spending variance (10) Efficiency variance (11) Now compute the fixed manufacturing overhead spending and production-volume variances. (Label each variance as favorable (F) or unfavorable (U).) Spending variance (12) Production-volume variance (13) 1. Bright, Inc., is a manufacturer of vacuums and uses standard costing. Manufacturing overhead (both variable and fixed) is allocated to products on the basis of budgeted machine-hours. In 2017, budgeted fixed manufacturing overhead cost was $15,000,000. Budgeted variable manufacturing overhead was $8 per machine-hour. The denominator level was 1,000,000 machine-hours. Read the requirements Requirement 1. Prepare a graph for fixed manufacturing overhead. The graph should display how Bright, Inc.'s fixed manufacturing overhead costs will be depicted for the purposes of (a) planning and control and (b) inventory costing. (Enlarge the graph and use the tool line button displayed to draw the graph.) Fixed Manufacturing Overhead Costs Total Fixed Manufacturing $19,500,000 $18,000,000 $16,500,000 $15,000,000 $13,500,000 $12,000,000 S$10,500,000 & $9,000,000 $ $7,500,000 $6,000,000 $4,500,000 $3,000,000 $1,500,000 $07 6 400,000 800,000,200.000 Machine-Hours Requirement 2. Suppose that 925,000 machine-hours were allowed for actual output produced in 2017, but 850,000 actual machine-hours were used. Actual manufacturing overhead was $7,225,000, variable, and $14,925,000, fixed. Compute (a) the variable manufacturing overhead spending and efficiency variances and (b) the fixed manufacturing overhead spending and production-volume variances. (a) Begin by calculating the following amounts for the variable manufacturing overhead. Actual Input Actual Costs Incurred Flexible Budget Allocated Overhead Budgeted Rate Variable MOH Now compute the variable manufacturing overhead spending and efficiency variances. (Label each variance as favorable (F) or unfavorable (U).) Spending variance Efficiency variance (2) (b) Now compute the following amounts for the fixed manufacturing overhead. Same Budgeted Lump Sum Actual Costs Incurred Regardless of Output Level Flexible Budget Allocated Overhead Fixed MOH Now compute the fixed manufacturing overhead spending and production-volume variances. (Label each variance as favorable (F) or unfavorable (U).) Spending variance Production-volume variance Requirement 3. What is the amount of the under-or overallocated variable manufacturing overhead and the under-or overallocated fixed manufacturing overhead? Why are the flexible-budget variance and the under-or overallocated overhead amount always the same for variable manufacturing overhead but rarely the same for fixed manufacturing overhead? The variable manufacturing overhead is The fixed manufacturing overhead is (5) (6) by $ by $ Why are the flexible-budget variance and the under-or overallocated overhead amount always the same for variable manufacturing overhead but rarely the same for fixed manufacturing overhead? The flexible-budget variance and under- or overallocated overhead are always the same amount for variable manufacturing overhead, because the flexible-budget amount of variable manufacturing overhead and the allocated amount of . In contrast, the budgeted and allocated amounts for fixed manufacturing overhead only coincide when the (8) level. input of the allocation base for the actual output level achieved (9) the denominator Requirement 4. Suppose the denominator level was 600,000 rather than 1,000,000 machine-hours. What variances in requirement 2 would be affected? Recompute them. Begin by calculating the variable manufacturing overhead spending and efficiency variances. (Label each variance as favorable (F) or unfavorable (U).) Spending variance (10) Efficiency variance (11) Now compute the fixed manufacturing overhead spending and production-volume variances. (Label each variance as favorable (F) or unfavorable (U).) Spending variance (12) Production-volume variance (13)