Determine the overhead application rate. (Round answer to 2 decimal places, e.g. 15.75.) | Overhead application rate | | $ | per direct labor hour | | Determine how much overhead was applied to production. | | | |
| | Calculate the total overhead variance, controllable variance, and volume variance. (Round variable overhead to 2 decimal places and final answers to 0 decimal places, e.g. 1,575.) | Total overhead variance | | $ | Favorable/Unfavorable/ Neither favorable nor unfavorable | | | Controllable variance | | $ | Favorable/Unfavorable/ Neither favorable nor unfavorable | | | Volume variance | | $ | Favorable/Unfavorable/ Neither favorable nor unfavorable | | | | | |
| | Decide which overhead variances should be investigated. Choose your answer here Controllable variance/ Volume variance/ Both of the above/ Neither of the above | | |
Expand Your Critical Thinking 24-02 a-d Ana Carillo and Associates is a medium-sized company located near a large metropolitan area in the Midwest. The company manufactures cabinets of mahogany, oak, and other fine woods for use in expensive homes, restaurants, and hotels. Although some of the work is custom, many of the cabinets are a standard size. One such non-custom model is called Luxury Base Frame. Normal production is 1,000 units. Each unit has a direct labor hour standard of 5 hours. Overhead is applied to production based on standard direct labor hours. During the most recent month, only 990 units were produced; 4,500 direct labor hours were allowed for standard production, but only 4,000 hours were used. Standard and actual overhead costs were as follows. Actual (990 units) Indirect materials Indirect labor (Fixed) Manufacturing supervisors salaries (Fixed) Manufacturing office employees salaries (Fixed) Engineering costs Computer costs Electricity (Fixed) Manufacturing building depreciation (Fixed) Machinery depreciation (Fixed) Trucks and forklift depreciation Small tools (Fixed) Insurance (Fixed) Property taxes Total Standard (1,000 units) $ 13,300 47,800 25,000 14,400 30,000 11,100 2,800 8,900 3,300 1,700 800 $ 13,700 56,700 24,400 13,900 27,800 11,100 2,800 8,900 3,300 1,700 1,600 600 600 300 300 $160,000 $166,800
