Ferguson Farrar Limited is a manufacturing company. For the month of April 20X3 it budgeted for 4000 units of production, each to use 1.5 hours of machine time. Production overhead absorption rates were budgeted as follows: Variable production overhead = £4 per machine hour. Fixed production overhead = £8 per machine hour. The actual level of production in the month was 4200 units. The original production overhead budget, the flexed budget and the actual expenditure are shown in the following table: Original budget Flexed budget Actual Variable production overheads Fixed production overheads 24 000 25 200 26 250 48 000 50 400 48 750 72 000 75 600 75 000 Calculate: a) the variable production overhead variance b) the fixed production overhead variance.

Ferguson Farrar Limited is a manufacturing company. For the month of April 20X3 it budgeted for 4000 units of production, each to use 1.5 hours of machine time. Production overhead absorption rates were budgeted as follows: Variable production overhead = £4 per machine hour. Fixed production overhead = £8 per machine hour. The actual level of production in the month was 4200 units. The original production overhead budget, the flexed budget and the actual expenditure are shown in the following table: Original budget Flexed budget Actual Variable production overheads Fixed production overheads 24 000 25 200 26 250 48 000 50 400 48 750 72 000 75 600 75 000 Calculate: a) the variable production overhead variance b) the fixed production overhead variance.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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