Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Total overhead, 3-variance analysis. Ames Fir Force Base has a bay that specializes in maintenance for aircraft engines. It uses standard costing and flexible budgets

Total overhead, 3-variance analysis. Ames Fir Force Base has a bay that specializes in maintenance

for aircraft engines. It uses standard costing and flexible budgets to account for this activity. For 2014,

budgeted variable overhead at a level of 8,000 standard monthly direct labor-hours was $64,000;

budgeted total overhead at 10,000 standard monthly direct labor-hours was $197,600. The standard

cost allocated to repair output included a total overhead rate of 120% of standard direct labor costs.

For February, Ames incurred a total overhead of $249,000 and direct labor costs of $202,440. The

direct labor price variance was $9,640 unfavorable. The direct labor flexible-budget was $14,440

unfavorable. The standard price was $16 per hour. The production-volume variance was $14,000

favorable.

Summary of data provided:

Budgeted direct labor-hours 8,000 hours

Budgeted variable overhead costs

$64,000

Budgeted total overhead @ 10,000 standard direct labor-hours $197,600

Standard total overhead allocation rate

120% Standard Direct Labor Costs

Actual total overhead incurred

$249,000

Actual direct labor costs

$202,440

Direct labor price variance

$9,640 (U)

Direct labor flexible-budget variance

$14,440 (U)

Standard price per hour

$16

Production-volume variance

$14,000 (F)

1a) Compute the direct labor efficiency variance.
Hint: Enter the amounts you know, you may have to work backwards to get the solution.
1b)

Is the direct labor efficiency variance F(avorable) or U(nfavorable)?

2a) Compute the total overhead spending variance
2b) Is the variable overhead spending variance F(avorable) or U(nfavorable)?
2c) Compute the total overhead efficiency variance?
2d) Is the total overhead efficiency variance F(avorable) or U(nfavorable)?
2e) Compute the total overhead spending variance?
2f) Is the total overhead spending variance F(avorable) or U(nfavorable)?

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Information Technology Auditing And Assurance

Authors: James A. Hall, Tommie Singleton

2nd Edition

0324191987, 978-0324191981

More Books

Students also viewed these Accounting questions

Question

2. Identify five movie characters who embody the renegade cop type.

Answered: 1 week ago