Compute overhead variances using a three-variance approach.
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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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- The manager of Mandaue LTO has determined that it typically takes 30 minutes for the department's employees to register a new car. In Mandaue, the fixed overhead rate computed on ah estimated 4,000 direct labor hours is P8 per direct labor hour, whereas the variable overhead rate is estimated at P3 per direct labor hour. During July, 7,600 cars were registered in Mandaue and 3,700 direct labor hours were worked in registering those vehicles. For the month, variable overhead was P10,730 and fixed overhead was P29,950 Required: a. Compute the overhead variances using a four-variance approach. b. Compute the overhead variances using a three-variance approach c. Compute the overhead variances using a two-variance approach d. Compute the overhead variances uUsing a one way approach.OH variancesThe manager of the Texas Department of Transportation has determined that it typically takes 30 minutes for the department’s employees to register a new car. In Bexar County, the predetermined fixed overhead rate was computed on an estimated 10,000 direct labor hours per month and is $9 per direct labor hour, whereas the predetermined variable overhead rate is $3 per direct labor hour.During July, 18,800 cars were registered in Bexar County, and 9,500 direct labor hours were worked in registering those vehicles. For the month, variable overhead was $27,700 and fixed overhead was $90,800.Note: In answering the following questions, do not use negative signs with your answers. a. Compute overhead variances using a four-variance approach. VOH Spending Variance Actual VOH - Budgeted VOH = VOH Spending Variance - = VOH Efficiency Variance Budgeted VOH - Applied VOH = VOH Efficiency Variance - = FOH Spending…The manager at Screaming Trees has been trying to calculate the portion of the company's overhead expenses that is fixed and the portion that is variable. Over the past twelve months, the number of yards of mulch processed was highest in July, when the total monthly overhead costs totaled $32,000 for 37,000 yards of mulch processed. The lowest number of yards of mulch processed in the last twelve months occurred in October, when total overhead costs were $26,000 for 26,000 yards of mulch processed. What was the variable cost per yard? OA. $1.00 O B. $1.83 O C. $0.55 O D. $0.86
- (Computation of all overhead variances) The manager of the Automobile Registration Division of the state of Nebraska has determined that it typically takes 30 minutes for the department’s employees to register a new car. The following predetermined overhead costs are applicable to Lancaster County. Fixed overhead, computed on an estimated 4,000 direct labor hours, is $8 per DLH. Variable overhead is estimated at $3 per DLH. During July 2001, 7,600 cars were registered in Lancaster County, taking 3,700 direct labor hours. For the month, variable overhead was $10,730 and fixed overhead was $29,950. a. Compute overhead variances using a four-variance approach. b. Compute overhead variances using a three-variance approach. c. Compute overhead variances using a two-variance approach.Please look the answers I have done and let me know if they are correct and help me with the final boxes, please. Adams Corporation estimated its overhead costs would be $23,100 per month except for January when it pays the $121,410 annual insurance premium on the manufacturing facility. Accordingly, the January overhead costs were expected to be $144,510 ($121,410 + $23,100). The company expected to use 7,300 direct labor hours per month except during July, August, and September when the company expected 9,000 hours of direct labor each month to build inventories for high demand that normally occurs during the Christmas season. The company’s actual direct labor hours were the same as the estimated hours. The company made 3,650 units of product in each month except July, August, and September, in which it produced 4,500 units each month. Direct labor costs were $24.50 per unit, and direct materials costs were $11.70 per unit. Required Calculate a predetermined overhead rate based…Pocono Cement Forms expects $700,000 in overhead during the next year. It does not know whether it should apply overhead on the basis of its anticipated direct labor hours of 50,000 or its expected machine hours of 25,000. Determine the product cost under each predetermined allocation rate if the last job incurred $1,560 in direct material cost, 102 direct labor hours, and 85 machine hours. Wages are paid at $15 per hour. Labor Hours Machine Hours Cost of the job $ $
- Cavy Company estimates that total factory overhead costs for the following year will be $1,749,900. The company has decided that the basis for applying factory overhead should be machine hours, which are estimated to be 30,700 hours. The machine hours for the month of April for all of the jobs were 5,300. If the actual factory overhead for April totaled $309,350. Determine the over- or underapplied amount for the month. Enter the amount as a positive number.Harrison, Inc. is preparing their budget for the upcoming year and requires a breakdown of the costs of power used in its factory into the fixed and variable components. They have determined the number of direct labor hours worked affects the cost of power. The following data on the cost of power used and direct labor hours worked are available for the last six months of this year: Month July August September October High-Low Method November December Total Cost of Power $ 14,850 15,400 16,370 19,800 17,600 18,500 $102.520 Direct Labor Hours 3,000 2,050 2,900 3,650 2,670 2,650 16.920 1. Assuming that Harrison uses the high-low method of analysis, calculate the cost function to be used to estimate the power costs. 2. They have determined that production needs will require 8,467 direct labor hours. Using the cost function calculated above, what is the estimated cost of power?Pocono Cement Forms expects $900,000 in overhead during the next year. It does not know whether it should apply overhead on the basis of its anticipated direct labor hours of 60,000 or its expected machine hours of 30,000. Determine the product cost under each predetermined allocation rate if the last job incurred $1,550 in direct material cost, 90 direct labor hours, and 75 machine hours. Wages are paid at $16 per hour.
- Park Industries manufactures custom-designed playground equipment for schools and city parks. Park expected to incur S784,700 of manufacturing overhead cost, 41,300 of direct labor hours, and S1,073,800 of direct labor cost during the year (the cost of direct labor is $26 per hour). The company allocates manufacturing overhead on the basis of direct labor nours. During August, Park completed Job 306. The job used 165 direct labor hours and required S12,700 of direct materials. The City of Jonestown has contracted to purchase the playground equipment at a price of 27% over manufacturing cost. Reac the requirements Requirement First identify the formulathen calculate the predetermined overhead rate. Estimated yearly overhead costs Estimated yearly direct labor hours - Predetermined overhead rate per hourStargazer Company logged 7,250 machine hours for the month of June. P42,500 was spent for manufacturing overhead and this overhead is allocated on the basis of machine hours. The company operates 5 departments; however, one department was closed for the month of June due to poor market conditions for its product. It was decided that this department (#3) should be allocated a lump sum of P5,000 as its share of June overhead. 24. If this policy is followed, how much overhead would be charged to Department 2, which used 1,750 machine hours? P 1,207 b. P 9,052. m а. na C. P10,259 etr od bluovEdoo d. P20,714Cavy Company estimates that the factory overhead for the following year will be $1,788,000. The company has decided that the basis for applying factory overhead should be machine hours, which is estimated to be 29,800 hours. The machine hours for the month of April for all of the jobs were 4,770. If the actual factory overhead for April totaled $280,190, determine the over- or underapplied amount for the month. Enter the amount as a positive number.