ACME manufacturing is a low-cost producer of a single, commodity product: RGL-01. Standard overhead cost information for one unit of this product is presented below: Standard number of machine hours per unit produced Standard variable overhead rate per machine hour Budgeted fixed overhead (for the year) Practical capacity, in units (annual basis) Budgeted output for the coming year, in units. Normal capacity, in units (per year). Actual production for the year (in units) Actual overhead costs incurred during the year: Fixed overhead Variable overhead Actual number of machine hours per unit for work done this period 1. Fixed overhead application rate 2. Total overhead application rate 3. Total overhead variance for the year Budgeted Output Required: 1. Calculate the fixed overhead application rate per machine hour using (a) budgeted output, (b) normal capacity, and (c) practical capacity. (Round your answers to 2 decimal places.) 2. What is the total overhead application rate per machine hour for each of the three choices identified in requirement 1? (Round your answers to 2 decimal places.) 3. What is the total overhead variance for the year when the overhead application rate per machine hour is determined under each of the following options: (a) budgeted output, (b) normal capacity, and (c) practical capacity? Indicate whether each variance is favorable (F) or unfavorable (U). (Do not round intermediate calculations. Round your answers to the nearest whole dollar amount.) per machine hour per machine hour Normal Capacity 0.5 $ 30.00 $ 500,000 10,000 8,000 9,000 9,200 $ 480,000 $ 146,600 0.49 per machine hour per machine hour Practical Capacity per machine hour per machine hour
ACME manufacturing is a low-cost producer of a single, commodity product: RGL-01. Standard overhead cost information for one unit of this product is presented below: Standard number of machine hours per unit produced Standard variable overhead rate per machine hour Budgeted fixed overhead (for the year) Practical capacity, in units (annual basis) Budgeted output for the coming year, in units. Normal capacity, in units (per year). Actual production for the year (in units) Actual overhead costs incurred during the year: Fixed overhead Variable overhead Actual number of machine hours per unit for work done this period 1. Fixed overhead application rate 2. Total overhead application rate 3. Total overhead variance for the year Budgeted Output Required: 1. Calculate the fixed overhead application rate per machine hour using (a) budgeted output, (b) normal capacity, and (c) practical capacity. (Round your answers to 2 decimal places.) 2. What is the total overhead application rate per machine hour for each of the three choices identified in requirement 1? (Round your answers to 2 decimal places.) 3. What is the total overhead variance for the year when the overhead application rate per machine hour is determined under each of the following options: (a) budgeted output, (b) normal capacity, and (c) practical capacity? Indicate whether each variance is favorable (F) or unfavorable (U). (Do not round intermediate calculations. Round your answers to the nearest whole dollar amount.) per machine hour per machine hour Normal Capacity 0.5 $ 30.00 $ 500,000 10,000 8,000 9,000 9,200 $ 480,000 $ 146,600 0.49 per machine hour per machine hour Practical Capacity per machine hour per machine hour
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter4: Activity-based Costing
Section: Chapter Questions
Problem 4CE: Larsen, Inc., produces two types of electronic parts and has provided the following data: There are...
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Variance Analysis
In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.
Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
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