Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Baird Company makes classic Polish sausage. The company uses a standard cost system to help control costs. Manufacturing overhead is applied to production on the
Baird Company makes classic Polish sausage. The company uses a standard cost system to help control costs. Manufacturing overhead is applied to production on the basis of standard direct labor-hours. According to the company's planning budget, the following manufacturing overhead costs should be incurred at an activity level of 19,000 labor-hours (the denominator activity level): Variable manufacturing overhead cost Fixed manufacturing overhead cost Total manufacturing overhead cost $ 57,000 95,000 $ 152,000 During the most recent year, the following operating results were recorded: Activity: Actual labor-hours worked Standard labor-hours allowed for the actual output Cost: Actual variable manufacturing overhead cost incurred Actual fixed manufacturing overhead cost incurred 16,000 17,000 $ 65,600 $ 80,750 At the end of the year, the company's Manufacturing Overhead account contained the following data: Manufacturing Overhead Debit Credit Actual 146,350 Applied 136,000 10,350 Management would like to determine the cause of the $10,350 underapplied overhead. Required: 1. Compute the predetermined overhead rate. Break the rate down into variable and fixed cost elements. 2. Show how the $136,000 Applied figure in the Manufacturing Overhead account was computed. 3. Break down the $10,350 underapplied overhead into four components: (1) variable overhead rate variance. (2) variable overhead efficiency variance, (3) fixed overhead budget variance, and (4) fixed overhead volume variance. Required 1 Required 2 Required 3 Compute the predetermined overhead rate. Break the rate down into variable and fixed cost elements. (Round your answers to 2 decimal places.) Predetermined overhead rate Variable element Fixed element per hour per hour per hour Required 1 Required 2 Required 3 Show how the $136,000 Applied figure in the Manufacturing Overhead account was computed. (Round your per hour value to 2 decimal places.) per hour Required 1 Required 2 Required 3 Break down the $10,350 underapplied overhead into four components: (1) variable overhead rate variance, (2) variable overhead efficiency variance, (3) fixed overhead budget variance, and (4) fixed overhead volume variance. (Indicate the e of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values.) Variable overhead: Rate variance Efficiency variance Fixed overhead: Budget variance Volume variance Show less
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started