8-34 Flexible budgets, 4-variance analysis. (CMA, adapted) Wilson Products uses standard costing. It allocates manufacturing overhead (both variable and fixed) to products on the basis of standard direct manufacturing labor-hours (DLH). Wilson Products develops its manufacturing overhead rate from the current annual budget. The manufacturing overhead budget for 2014 is based on budgeted output of 672,000 units, requiring 3,360,000 DLH. The company is able to schedule production uniformly throughout the year.

A total of 72,000 output units requiring 321,000 DLH was produced during May 2014. Manufacturing overhead (MOH) costs incurred for May amounted to $355,800. The actual costs, compared with the annual budget and 1/12 of the annual budget, are as follows:

Variable MOH Indirect manufacturing labor Supplies

Fixed MOH Supervision Utilities Depreciation

Total

$

$277,200

Annual Manufacturing Overhead Budget 2014

Total Amount

$ 1,008,000 672,000

571,200 369,600 705,600

$3,326,400

Per Per DLH Output Input Unit Unit

$1.50 $0.30 1.00 0.20

0.85 0.17 0.55 0.11 1.05 0.21

$4.95 $0.99

Monthly MOH Budget May 2014

Actual MOH Costs for May 2014

$ 84,000 117,000

41,000 55,000 88,800

$355,800

ASSIGNMENT MATERIAL 323

Total manufacturing overhead costs allocated

Variable manufacturing overhead spending variance

Fixed manufacturing overhead spending variance

Variable manufacturing overhead efficiency variance

Production-volume variance

Be sure to identify each variance as favorable (F) or unfavorable (U