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Variances and conversion cost category Svenson Technology considers direct labor cost too insignificant to separately account for and, therefore, uses a $22.50 per machine hour
Variances and conversion cost category Svenson Technology considers direct labor cost too insignificant to separately account for and, therefore, uses a $22.50 per machine hour predetermined conversion cost rate (of which $16 is related to fixed overhead costs). The conversion rate was established based on expected capacity of 201,720 machine hours. One of Svenson Technology's products requires 4.1 machine hours to manufacture. In September, the company manufactured 4,200 units of product and used 16,600 machine hours and 168 direct labor hours. Variable and fixed conversion costs incurred for September were $110,246 and $266,000, respectively. a. What is the expected capacity per month in units and machine hours? Expected capacity in units Expected capacity in MHs b. Prepare a four-variance analysis of conversion costs for September. Note: Do not use negative signs with your answers. Fixed Conv. Spending Variance Actual Fixed Conv. - Budgeted Fixed Conv. = Spending Variance $ $ $ Fixed Conv. Volume Variance Applied Fixed Conv. = Volume Variance Budgeted Fixed Conv. $ Actual Var. Conv. Variable Conv. Spending Variance Budgeted Var. Conv. = Spending Variance $ $ $ Budgeted Var. Conv. $ Variable Conv. Efficiency Variance Applied Var. Conv. = Efficiency Variance $ = $ C. Prepare a three-variance analysis of conversion costs for September. Note: Do not use negative signs with your answers. OH Spending Variance Actual Conv. Budgeted Conv. At Actual = Spending Variance $ $ Budgeted Conv. at Actual $ OH Efficiency Variance Budgeted Conv. at Std. = Efficiency Variance Budgeted Conv. at Std. Volume Variance Applied Conv. = Volume Variance $ $
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