Question
Products uses standard costing. It allocates manufacturing overhead (both variable and fixed) to products on the basis of standard direct manufacturing labor-hours (DLH). Products develops
Products uses standard costing. It allocates manufacturing overhead (both variable and fixed) to products on the basis of standard direct manufacturing labor-hours (DLH). Products develops its manufacturing overhead rate from the current annual budget. The manufacturing overhead budget for 2014 is based on budgeted output of 684,000 units, requiring 4,104,000 DLH. The company is able to schedule production uniformly thorughout the year. A total of 75,000 output units requiring 320,000 DLH was produced during May 2014 . Manufacturing overhead (MOH) costs incurred for May amounted to $ 395,680 . The actual costs, compared with the annual budget and 1/12 of the annual budget, are as follows:
Annual Manufacturing Overhead Budget 2014,,,,, Per, Per DLH, Monthly, Actual MOH , Total, Output , Input, MOH Budget, Costs for , Amount, Unit , Unit, May 2014, May 2014 Variable MOH,,,,, Indirect manufacturing labor,"$1,231,200", $1.80, $0.30," $102,600"," $102,600" Supplies, "820,800", 1.20, 0.20, "68,400"," 112,000" Fixed MOH,,,,, Supervision," 533,520", 0.78 ,0.13," 44,460"," 41,000" Utilities," 615,600" ,0.90 ,0.15," 51,300"," 58,000" Depreciation," 984,960", 1.44, 0.24," 82,080"," 82,080" Total," $4,186,080 ",$6.12 ,$1.02," $348,840"," $395,680"
Requirements:
Calculate the following amounts for products for May 2014:
1. Total manufacturing overhead costs allocated.
2. Variable manufacturing overhead spending variance.
3. Fixed manufacturing overjead spending variance.
4. Variable manufacturing overhead efficiency variance.
5. Production-volume variance.
Be sure to identify each variance a favorable (F) or unfavorable (U).
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