E8-25

The Revolutions Corporation is a manufacturer of centrifuges. Fixed and variable manufacturing overheads are allocated to each centrifuge using budgeted assembly-hours. Budgeted assembly time is 2 hours per unit. The following table shows the budgeted amounts and actual results related to overhead for June 2017.

Data Table

	Actual	Static
The Revolutions Corporation (June 2017)	Results	Budget
Number of centrifuges assembled and sold	240	130
Hours of assembly time	312
Variable manufacturing overhead cost per hour of assembly time		$29.00
Variable manufacturing overhead costs	$9,469
Fixed manufacturing overhead costs	$13,670	$12,220

Requirements

1.	Prepare an analysis of all variable manufacturing overhead and fixed manufacturing overhead variances.
2.	Prepare journal entries for Revolutions' June 2017 variable and fixed manufacturing overhead costs and variances; write off these variances to Cost of Goods Sold for the quarter ending June 30, 2017.
3.	How does the planning and control of variable manufacturing overhead costs differ from the planning and control of fixed manufacturing overhead costs?

Requirement 1. Prepare an analysis of all variable manufacturing overhead and fixed manufacturing overhead variances.

Begin by calculating the following amounts for the variable overhead.

		Actual Input
	Actual Costs	x	Flexible	Allocated
	Incurred	Budgeted Rate	Budget	Overhead
Variable OH