Question
Surf Central manufactures surf boards for world class surfers, such as Kelly Slater. Before the new period began, management prepared the following manufacturing overhead budget
Surf Central manufactures surf boards for world class surfers, such as Kelly Slater. Before the new period began, management prepared the following manufacturing overhead budget for an expected activity level of 20,000 direct labor hours (DL Hours):
Variable Manufacturing Overhead Costs | $300,000 |
Fixed Manufacturing Overhead Costs | $250,000 |
At the end of the period, the company noted that 4,000 fewer direct labor hours were logged than expected. The total actual manufacturing overhead costs during the period was $575,000, $352,000 of which was variable manufacturing overhead.
With regard to the data above, which of the following statements is correct?
A.
The master budget variance related to variable manufacturing overhead is $172,000 U.
B.
Assuming a materiality threshold of $50,000, the flexible budget variances for variable manufacturing overhead and fixed manufacturing overhead should be investigated.
C.
More than one of the above statements is correct.
D.
The volume variance for both variable and fixed manufacturing overhead $87,000 F.
E.
The flexible budget variance for variable manufacturing overhead is $112,000 U.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started