Assignment: Chapter 11 Homework 11. CenterWare is a manufacturer of large flower pots for urban settings. The company has these standards (Click the icon to view the standards) 2(Click the icon to view the actual results) Requirements 1. Compute the variable manufacturing overhead variances. What do each of these variances tell management? 2. Compute the fixed manufacturing overhead variances. What do each of these variances tell management? Requirement 1. Compute the variable manufacturing overhead variances. What do each of these variances tell management? (Enter the variances as positive numbers. Enter the currency amounts in the formulas to the nearest cent, then round the final variance amounts to the nearest whole dollar. Label the variance as favorable (F) or unfavorable (U).) Begin by computing the variable manufacturing overhead rate variance. First determine the formula for the rate variance, then compute the rate variance for variable manufacturing overhead. Variable overhead (2) ) = rate variance x | ( Now compute the variable manufacturing overhead efficiency variance. First determine the formula for the efficiency variance, then compute the efficiency variance for variable manufacturing overhead. (5) Variable overhead efficiency variance x (6) - (7) ) = XL What do each of these variances tell management? The (9) (11) - variable manufacturing overhead (MOH) rate variance tells managers that (10) - were than expected. The (12) - variable MOH efficiency variance tells managers that actual (13) were (14) than (15) Requirement 2. Compute the fixed manufacturing overhead variances. What do each of these variances tell management? (Abbreviations used: MOH = manufacturing overhead. Enter the variances as positive numbers. Label the variances as favorable (F) or unfavorable (U).) Begin by computing the fixed manufacturing overhead budget variance. First determine the formula for the budget variance, then compute the budget variance for fixed manufacturing overhead. Fixed MOH = budget variance (16) 1 (17) 11 Now compute the fixed manufacturing overhead volume variance. First determine the formula for the volume variance, then compute the volume variance for fixed manufacturing overhead. Fixed MOH = volume variance (19) (20) What do each of these variances tell management? The (22) fixed overhead budget variance tells managers that (23) The (24) fixed overhead volume variance tells managers that (25) 1: Standard Price and Volume Direct materials (resin) ........ .......... 13 pounds per pot at a cost of $6.00 per pound Direct labor ........... ..........3.0 hours at a cost of $12.00 per hour Standard variable manufacturing overhead rate ............ $5.00 per direct labor hour Budgeted fixed manufacturing overhead ....... $36,400 Standard fixed MOH rate .................... $8.00 per direct labor hour (DLH) 2: Actual Results CenterWare allocated fixed manufacturing overhead to production based on standard direct labor hours. Last month, the company reported the following actual results for the production of 1,600 flower pots: Direct materials ............... Purchased 22,460 pounds at a cost of $6.30 per pound; Used 21,760 pounds to produce 1,600 pots Direct labor. ........ Worked 3.4 hours per flower pot (5,440 total DLH) at a cost of $11.00 per hour Actual variable manufacturing overhead .... $5.70 per direct labor hour for total actual variable manufacturing overhead of $31,008 Actual fixed manufacturing overhead ...... $35,800 Standard fixed manufacturing overhead allocated based on actual production ....... $38,400 Standard hours allowed Standard rate (1) O O Actual hours Actual quantity purchased Actual rate (2) Standard hours allowed Standard rate Actual hours Actual quantity purchased O Actual rate Standard hours allowed Standard rate (3) O Actual hours Actual quantity purchased O Actual rate (4) O OF OU Standard hours allowed O Standard rate (5) O Actual hours Actual quantity purchased O Actual rate (6) O Standard hours allowed Standard rate Actual hours Actual quantity purchased Actual rate Standard hours allowed Standard rate (8) O OF OU (9) O O (7) O Actual hours Actual quantity purchased O Actual rate favorable unfavorable (11) O higher O lower (12) O O favorable unfavorable (10) O O O O actual manufacturing overhead costs direct labor costs direct labor hours direct materials (15) O (13) O direct materials O direct labor hours O manufacturing overhead costs (14) O higher O lower budgeted direct material costs budgeted manufacturing overhead costs standard hours allowed O (16) O Actual fixed overhead Budgeted fixed overhead O Standard hours allowed Standard quantity allowed Standard rate Std. fixed overhead cost allocated to production (17) O O Actual fixed overhead O Budgeted fixed overhead Standard hours allowed Standard quantity allowed Standard rate Std. fixed overhead cost allocated to production (18) O OF OU (19) Actual fixed overhead Budgeted fixed overhead Standard hours allowed Standard quantity allowed Standard rate Std. fixed overhead cost allocated to production (20) (21) Standard quantity allowed Standard rate Std. fixed overhead cost allocated to production Actual fixed overhead Budgeted fixed overhead Standard hours allowed OF (24) O (22) O favorable unfavorable favorable unfavorable (23) O less fixed overhead costs were incurred than were budgeted for O more fixed overhead costs were incurred than were budgeted for O production volume was greater than anticipated production volume was less than anticipated (25) O less fixed overhead costs were incurred than were budgeted for O more fixed overhead costs were incurred than were budgeted for O production volume was greater than anticipated O production volume was less than anticipated