2 ! Required Information Learning Objective 08-24: Compute overhead controllable and volume variances, Overhead Variances are due to differences between the actual overhead costs incurred and the overhead applied to production. The overhead controllable variance equals the actual overhead minus the budgeted overhead. The volume variance equals the budgeted fixed overhead minus the appiled fixed overhead OK Flexible Overhead Budgets & Overhead Standards ce Feli Hay 11 | 4. li li 19.00 2.1 24 10 LOW Pey dow BRO O #O 2000 112 Standard Direct Labor Hours 4,000 X 0.50 DLH per unit 2,000 DLN Mandard overhead Pote budgeted verhead at presidity level Standard letion bat predicted city level $20,000 3,000 $10 per LN Knowledge Check 01 A Min Company operates at 80% capacity. At this level, they produce 1.000 units total overhead costs are $15,000, and they predict they will use 10.000 direct labor hours Standard overhead rate per direct labor hour at 80% capoty is G-MAX Flexible Overhead Budgets Variable Total Flexible budget at Capacity Level of Amount Fixed Cost Bow per Unit --- 1 unit 3,500 4,000 4,500 5,000 For Month Ended May 31 Production (in units) Factory overhead Variable costs Indirect labor Indirect materials Power and lights Maintenance Total variable overhead costs Fixed costs (per month) Building rent Depreciation - Machinery Supervisory salaries Total fixed overhead costs. Total overhead $0.80/unit 0.60/unit 0.40/unit 0.20/unit $2.00/unit $ 2,800 $3,200 $3,600 $ 4,000 2,100 2,400 2,700 3,000 1,400 1,600 1,800 2,000 700 800 900 1,000 7,000 3,000 9,000 10,000 $2,000 $2,000 $2,000 $2,000 $2,000 4,000 4,000 4,000 4,000 4,000 6,000 6,000 6,000 6,000 6,000 $ 12,000 12,000 12,000 12.000 12,000 $19,000 20,000 $21,000 $22.000 Standard Direct Labor Hours = 4,000 x 0.50 DLH per unit = 2,000 DLH Standard overhead rate = Budgeted overhead at predicted activity level Standard allocation base at predicted activity level Required information Learning Objective 08-P4: Compute overhead controllable and volume variances. Overhead variances are due to differences between the actual overhead costs incurred and the overhead applied to production. The overhead controllable variance equals the actual overhead minus the budgeted overhead. The volume variance equals the budgeted fixed overhead minus the applied fixed overhead Flexible Overhead Budgets & Overhead Standards G-MAX Flexible Overhead Budgets Variable Total Flexible budget at Capacity level of Amount ied per un Ceat 30 For month Ended May 31 unt 2.500 4,000 4,500 5.000 Production in units Factory overhead Variable costs Indirector Indirect materials Power and he Maintenance Total variable overhead costs sed cost per month 30.0 0. 0.40 $ 2.000 3.00 3.600 4.000 2.100 2.400 2,700 2,000 1.400 1.600 1.00 2.000 200 100 000 1.000 7.000 B000 10.000 12.00 2.000 rate predicted activity level Standard allocation base at predicted activity level $20,000 2,000 DLH = $10 per DLH Knowledge Check 01 A Min Company operates at 80% capacity. At this level, they produce 1,000 units, total overhead costs are $15,000, and they predict they will use 10,000 direct labor hours. Standard overhead rato por direct labor hour at 80% capacity is