This is the right answer but how to get the 128,000 flexible budget overhead for actual outputs. I only need to understand requirement 2 on how to get 128,000. Thanks....
Data table Data table The company has these standards: Direct materials (clay) 1 kg per bottle at a cost of $0.40 per kg Direct labour 1/5 hour per bottle, at a cost of $14.00 per hour Static budget variable overhead $70,000 Static budget fixed overhead $30,000 Static budget direct labour hours 10,000 hours Static budget number of bottles 50,000 Watermate allocates manufacturing overhead to production based on standard direct labour hours Last month, Watermate reported the following actual results for the production of 70,000 bottles Direct materials . 1.1 kg per bottle, at a cost of $0.50 per kg Direct labour 1/4 hour per bottle at a cost of $13.00 per hour Actual variable overhead $104,000 Actual fixed overhead $28,000 Watermate is a manufacturer of ceramic bottles. Click the icon to view the standards.) E (Click the icon to view the actual results.) Requirements 1. Compute the total manufacturing overhead variance. What does this tell management? 2. Compute the overhead flexible budget variance. What does this tell management? 3. Compute the production volume variance. What does this tell management? $ 132 Requirement 1. Compute the total manufacturing overhead variance. What does this tell management? Identify the formula labels and compute the total manufacturing overhead variance. (Enter the result as a positive number. Label the variance as favourable (F) or unfavourable (U).) Total overhead variance Actual overhead cost 132,000 Standard overhead allocated to production 140,000 Total overhead variance What does the total manufacturing overhead variance tell management? This variance tells managers that Watermate overallocated manufacturing overhead by $ 8,000 140 8,000 F d di Requirement 2. Compute the overhead flexible budget variance. What does this tell management? Identify the formula labels and compute the overhead flexible budget variance. (Enter the result as a positive number. Label the variance as favourable (F) or unfavourable (U).) Overhead flexible budget variance Actual overhead cost 132.000 Flexible budget overhead for actual outputs Overhead flexible budget variance What does the overhead flexible budget variance tell management? This variance tells managers that Watermate actually incurred $4,000 more for manufacturing overhead than they would have expected for the actual volume produced during the year. same 128.000 4.000 How Requirement 3. Compute the production volume variance. What does this tell management? Identify the formula labels and compute the production volume variance. (Enter the result as a positive number. Label the variance as favourable (F) or unfavourable Production volume variance: Flexible budget overhead for actual outputs $ 128,000 Standard overhead allocated to production 140,000 12,000 Production volume variance $ F
