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Arca Incorporated makes a single product--a critical part used in commercial airline seats. The company has a standard cost system in which it applies overhead
Arca Incorporated makes a single product--a critical part used in commercial airline seats. The company has a standard cost system in which it applies overhead to this product based on the standard machine-hours allowed for the actual output of the period. Data concerning the most recent year appear below:
Budgeted (Planned) Overhead: | ||||
Budgeted variable manufacturing overhead | $ | 38,700 | ||
Budgeted fixed manufacturing overhead | 170,700 | |||
Total budgeted manufacturing overhead | $ | 209,400 | ||
Budgeted production (a) | 20,000 | units | ||
Standard hours per unit (b) | 1.50 | machine-hours | ||
Budgeted hours (a) (b) | 30,000 | machine-hours | ||
Applying Overhead: | ||||
Actual production (a) | 15,000 | units | ||
Standard hours per unit (b) | 1.50 | machine-hours | ||
Standard hours allowed for the actual production (a) (b) | 22,500 | machine-hours | ||
Actual Overhead and Hours: | ||||
Actual variable manufacturing overhead | $ | 9,812 | ||
Actual fixed manufacturing overhead | 185,700 | |||
Total actual manufacturing overhead | $ | 195,512 | ||
Actual hours | 22,300 | machine-hours | ||
The total of the overhead variances is:
Multiple Choice
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$38,462 F
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$13,888 U
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$38,462 U
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$13,888 F
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