Question
Required information Use the following information for the Exercises below. (Algo) Skip to question [The following information applies to the questions displayed below.] Sedona Company
Required information
Use the following information for the Exercises below. (Algo)
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[The following information applies to the questions displayed below.] Sedona Company set the following standard costs for one unit of its product for this year.
Direct material (15 pounds @ $3.20 per pound) | $ 48.00 |
---|---|
Direct labor (10 hours @ $7.00 per DLH) | 70.00 |
Variable overhead (10 hours @ $4.10 per DLH) | 41.00 |
Fixed overhead (10 hours @ $1.70 per DLH) | 17.00 |
Standard cost per unit | $ 176.00 |
The $5.80 ($4.10 + $1.70) total overhead rate per direct labor hour (DLH) is based on a predicted activity level of 35,700 units, which is 70% of the factorys capacity of 51,000 units per month. The following monthly flexible budget information is available.
Flexible Budget | Operating Levels (% of capacity) | ||
---|---|---|---|
65% | 70% | 75% | |
Budgeted production (units) | 33,150 | 35,700 | 38,250 |
Budgeted direct labor (standard hours) | 331,500 | 357,000 | 382,500 |
Budgeted overhead | |||
Variable overhead | $ 1,359,150 | $ 1,463,700 | $ 1,568,250 |
Fixed overhead | 606,900 | 606,900 | 606,900 |
Total overhead | $ 1,966,050 | $ 2,070,600 | $ 2,175,150 |
During the current month, the company operated at 65% of capacity, direct labor of 320,000 hours were used, and the following actual overhead costs were incurred.
Actual variable overhead | $ 1,325,000 |
---|---|
Actual fixed overhead | 649,650 |
Actual total overhead | $ 1,974,650 |
Exercise 21-28A (Algo) Detailed overhead variances LO P5
AH = Actual Hours SH = Standard Hours AVR = Actual Variable Rate SVR = Standard Variable Rate
1. Compute the variable overhead spending and efficiency variances. 2. Compute the fixed overhead spending and volume variances. 3. Compute the controllable variance.
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