Question
The Ramirez Company uses standard costing in its manufacturing plant for auto parts. The standard cost of a particular auto part, based on a
The Ramirez Company uses standard costing in its manufacturing plant for auto parts. The standard cost of a particular auto part, based on a denominator level of 4,000 output units per year, included 5 machine-hours of variable manufacturing overhead at $7 per hour and 5 machine-hours of fixed manufacturing overhead at $14 per hour. Actual output produced was 4,200 units. Variable manufacturing overhead incurred was $170,000. Fixed manufacturing overhead incurred was $303,000. Actual machine-hours were 22,000. Read the requirements. Requirement 1. Prepare an analysis of all variable manufacturing overhead and fixed manufacturing overhead variances, using the 4-variance analysis. Begin by calculating the following amounts for the variable overhead. Variable OH Actual Input Actual Costs x Incurred Budgeted Rate Flexible Budget Allocated Overhead Requirements 1. Prepare an analysis of all variable manufacturing overhead and fixed manufacturing overhead variances, using the 4-variance analysis. Prepare journal entries using the 4-variance analysis. 2. 3. Describe how individual fixed manufacturing overhead items are controlled from day to day. 4. Discuss possible causes of the fixed manufacturing overhead variances. -
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