Please explain how to get for #38, the variable overhead efficiency variance. If there is a simplified way, please show and use it. Also please explain for #40, how 600,000 was calculated for fixed manufacting overhead budget variance (BFO). Thank you.

37.

Franklin Glass Works uses a standard cost system in which manufacturing overhead is applied on the basis of standard direct labor-hours. Each unit requires two standard hours of direct labor for completion. The denominator activity for the year was based on budgeted production of 200,000 units. Total overhead was budgeted at $900,000 for the year, and the fixed manufacturing overhead rate was $1.50 per direct labor-hour. The actual data pertaining to the manufacturing overhead for the year are presented below: Actual production: 198,000 units

Actudal direct labor hours 440,000 direct labor hours

Actual variable manufacturing overhead $352,000

Actual fixed manufacturing overhead $575,000

The standard hours allowed for actual production for the year total:

A.

247,500

B.

396,000

C.

400,000

D.

495,000

Standard hours allowed = Standard hours Actual production = 2 hours per unit 198,000 units = 396,000 hours

38.

Franklin's variable overhead efficiency variance for the year is:

A.	$33,000 unfavorable

B.	$35,200 favorable

C.	$35,200 unfavorable

D.	$33,000 favorable

Predetermined overhead rate = Estimated total manufacturing overhead at capacity Estimated total amount of the allocation base at capacity = $900,000 (200,000 units 2 hours per unit) = $2.25 per hour Predetermined overhead rate = Fixed component of predetermined overhead rate + Variable component of predetermined overhead rate $2.25 per hour = $1.50 per hour + Variable component of predetermined overhead rate Variable component of predetermined overhead rate = $0.75 per hour = SR SH = 198,000 units 2 hours per unit = 396,000 hours Variable overhead efficiency variance = (AH - SH) SR = (440,000 hours - 396,000 hours) $0.75 per hour = (44,000 hours) $0.75 per hour = $33,000 U

39.

Franklin's variable overhead rate variance for the year is:

A.	$20,000 unfavorable

B.	$22,000 favorable

C.	$22,000 unfavorable

D.	$20,000 favorable

Predetermined overhead rate = Estimated total manufacturing overhead at capacity Estimated total amount of the allocation base at capacity = $900,000 (200,000 units 2 hours per unit) = $2.25 per hour Predetermined overhead rate = Fixed component of predetermined overhead rate + Variable component of predetermined overhead rate $2.25 per hour = $1.50 per hour + Variable component of predetermined overhead rate Variable component of predetermined overhead rate = $0.75 per hour = SR Variable overhead rate variance = (AH AR) - (AH SR) = $352,000 - (440,000 hours $0.75 per hour) = $352,000 - $330,000 = $22,000 U

40.

Franklin's fixed manufacturing overhead budget variance for the year is:

A.	$19,000 favorable

B.	$25,000 favorable

C.	$25,000 unfavorable

D.	$19,000 unfavorable

Budget variance = Actual fixed overhead - Budgeted fixed overhead cost = $575,000 - $600,000 = $25,000 F

41.

The fixed manufacturing overhead applied to Franklin's production for the year is:

A.

$484,200

B.

$575,000

C.

$594,000

D.

$600,000

Manufacturing overhead applied = Predetermined overhead rate Standard hours allowed for the actual output = 198,000 units $1.50 per hour 2 hours per unit = $594,000

42.

Franklin's fixed manufacturing overhead volume variance for the year is:

A.	$6,000 unfavorable

B.	$19,000 favorable

C.	$25,000 favorable

D.	$55,000 unfavorable

Volume variance = Budgeted fixed overhead cost - Fixed overhead applied to work in process = $600,000 - (198,000 units 2 hours per unit $1.50 per hour) = $600,000 - $594,000 = $6,000 U