Question
Predetermined OH Lansing Mfg. prepared the following annual abbreviated flexible budget for different levels of machine hours: 40,000 44,000 48,000 52,000 Variable manufacturing overhead $80,000
Predetermined OH
Lansing Mfg. prepared the following annual abbreviated flexible budget for different levels of machine hours:
40,000 | 44,000 | 48,000 | 52,000 | |
---|---|---|---|---|
Variable manufacturing overhead | $80,000 | $88,000 | $96,000 | $104,000 |
Fixed manufacturing overhead | 325,000 | 325,000 | 325,000 | 325,000 |
Each product requires four hours of machine time, and the company expects to produce 10,000 units for the year. Production is expected to be evenly distributed throughout the year. a. Calculate separate predetermined variable and fixed OH rates using as the basis of application (1) units of production and (2) machine hours. Note: Do not round your answers.
Variable OH Rate | Fixed OH Rate | |
---|---|---|
(1) Units of product | ||
(2) Machine hours |
b. Calculate the combined predetermined OH rate using (1) units of product and (2) machine hours. Note: Do not round your answers.
Combined Rate | |||||||
(1) Units of product | |||||||
(2) Machine hours |
c. Assume that all actual overhead costs are equal to expected overhead costs for the year, but that Lansing Mfg. produced 11,000 units of product. If the separate rates based on units of product calculated in (a) were used to apply overhead, what amounts of underapplied or overapplied variable and fixed overhead exist at year-end? Note: Do not use a negative sign with your answer.
Variable OH | OverappliedUnderappliedNeither over or under applied | ||||||
Fixed OH | OverappliedUnderappliedNeither over or under applied |
Lansing Mfg. prepared the following annual abbreviated flexible budget for different levels of machine hours:
40,000 | 44,000 | 48,000 | 52,000 | |
---|---|---|---|---|
Variable manufacturing overhead | $80,000 | $88,000 | $96,000 | $104,000 |
Fixed manufacturing overhead | 325,000 | 325,000 | 325,000 | 325,000 |
Each product requires four hours of machine time and the company expects to produce 10,000 units for the year. Assume that Lansing Mfg. has decided to use units of production to apply overhead to production. In April of the current year, the company produced 900 units and incurred $7,500 and $26,500 of variable and fixed overhead, respectively. a. What amount of variable manufacturing overhead should be applied to production in April? Applied VOH $Answer b. What amount of fixed manufacturing overhead should be applied to production in April? Applied FOH $Answer c. Calculate the under- or overapplied variable and fixed overhead for April. Note: Do not use negative signs with your answers.
Variable OH | OverappliedUnderappliedNeither over- or underapplied | |
Fixed OH | OverappliedUnderappliedNeither over- or underapplied |
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