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Baird Company makes classic Polish sausage. The company uses a standard cost system to help control costs. Manufactming overhead is applied to production on the
Baird Company makes classic Polish sausage. The company uses a standard cost system to help control costs. Manufactming overhead is applied to production on the basis of standard direct laborhours. According to the companys planning budget; the following 111anufacturing overhead costs should be incurred at an activity level of 3 5.000 laborhours (the denominator activity level): Variable manufacturing overhead cost - Fixed manufacturing overhead cost 210:000 Total manufacturing overhead cost 291500 During the most recent year. the following operating results were recorded: Activity: Acmal labor-hours worked 30.000 Standard laborhours allowed for the actual output 32,000 Cost: Actual variable manufacturing overhead cost incurred $l'8r000 Actual xed manufacturing overhead cost incurred $209,400 At the end of the year. the company's Manufacturing Overhead account contained the following data: Manufacturing Overhead Actual 381.000 Applied 3 I" 3 .000 15,400 Management would like to determine the cause of the $11400 tmderapphed overhead. a. (3 points) Compute the predetermined overhead rate. Break the rate down into variable and xed cost elements. b. (2 points) Show how the 3227-1000 Applied gure in the Manufacturing Overhead account was computed. c. (4 points) Breakdown the $15300 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
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