McCain supplies restaurants with many premanufactured ingredients (such as bags of frozen french fries). Assume that the McCain french fries manufacturing facility actually incurred $2,500,000 of manufacturing overhead for the year (51,725,000 variable overhead and $775,000 fixed overhead). Based on the actual output of french fries, the flexible budget indicated that total manufacturing overhead should have been $2,982,800. Using a standard costing system, the company allocated $3,050,000 of manufacturing overhead to production (52,915,000 variable overhead and $135,000 fixed overhead). The actual machine hours during the year were 250,000, which was 15,000 hours less than the standard. McCain's managers had estimated 270,000 hours when they created the budget. Manufacturing overhead is allocated based on machine hours Requirements 1. Calculate the total manufacturing overhead variance. What does this tell managers? Identify the formula labels, and calculate the total overhead variance. Total overhead variance: Actual overhead cost $ 2.500.000 3,050,000 Standard overhead allocated to production $ 550,000 Total overhead variance The variance tells managers that McCain incurred $ 550000 less in total manufacturing overhead than the amount of overhead applied. 2. Determine the overhead flexible budget variance. Determine the three separate variances that are involved in the flexible budget variance (the variable overhead spending and efficiency variances plus the fixed overhead budget variance). What does this tell managers? Identify the formula labels, and calculate the overhead flexible budget variance. Overhead flexible budget variance Actual overhead cost $ 2,500,000 2,982,800 Flexible budget overhead for actual outputs 482.800 Overhead flexible budget variance The variance tells managers that McCain actually incurred $ 482800 less manufacturing overhead than they would have expected for the actual volume of french fries produced during the year. Identify the formula labels, and calculate the variable overhead spending variance. (Do not round intermediary calculations. Only round the amount you input in the cell to the nearest dollar.) Variable overhead spending variance: Actual variable overhead 1725000 Requirements Flexible budget variable overhead Variable overhead spending variance managers? 1. Calculate the total manufacturing overhead variance. What does this tell 2. Determine the overhead flexible budget variance. Determine the three separate variances that are involved in the flexible budget variance (the variable overhead spending and efficiency variances plus the fixed overhead budget variance). What does this tell managers? 3. Determine the production volume variance. What does this tell managers? 4. Double check: Do the two variances (computed in Requirements 2 and 3) sum to the total overhead variance computed in Requirement 1? Print Done