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Warner Manufacturing has established the following master flexible budget for the current year. Production in Units 80 000 120.000 160.000 Variable expenses: Raw materials $152,000
Warner Manufacturing has established the following master flexible budget for the current year. Production in Units 80 000 120.000 160.000 Variable expenses: Raw materials $152,000 228,000 304,000 Direct labour 160,000 240,000 320,000 Manufacturing overhead 120 000 180.000 240.000 Total variable expenses $432 000 $648.000 $864.000 Fixed expenses: Manufacturing overhead Selling and administrative Total fixed expenses $300,000 192.000 $492,000 $300,000 192.000 $492,000 $300,000 192.000 $492000 Total expenses $924 000 S1 140,000 $1,356,000 Manufacturing overhead is applied on the basis of machine hours At standard, each unit of product requires one machine hour to complete Required: a) The denominator activity level is 120.000 units. What are the predetermined variable and fixed manufacturing overhead rates? (4 marks) b) Actual data for the year were as follows I Actual variable manufacturing overhead cost $159,500 Actual fixed manufacturing overhead cost $305,000 Actual machine hours incurred 110.000 Units produced 105,000 Compute the variable overhead spending and efficiency variances and the fixed overhead budget and volume variances for the year. (4 marks each)
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