Required information [The following information applies to the questions displayed below.] Sedona Company set the following standard costs for one unit of its product for this year. Direct material (20 pounds @ $2.10 per pound) Direct labor (10 hours @ $8.80 per DLH) Variable overhead (10 hours @ $4.00 per DLH) Fixed overhead (10 hours @ $1.80 per DLH) Standard cost per unit The $5.80 ($4.00+ $1.80) total overhead rate per direct labor hour (DLH) is based on a predicted activity level of 49,000 units, which is 70% of the factory's capacity of 70,000 units per month. The following monthly flexible budget information is available. Flexible Budget Budgeted production (units) Budgeted direct labor (standard hours) Budgeted overhead. Variable overhead Fixed overhead. Total overhead. Actual variable overhead Actual fixed overhead. Actual total overhead. $ 1,765,000 943,000 $ 2,708,000 Standard Direct Labor Hours Overhead Rate Variable overhead variance Fixed overhead variance $ $ 42.00 88.00 40.00 18.00 $ 188.00 During the current month, the company operated at 65% of capacity, direct labor of 435,000 hours were used, and the following actual overhead costs were incurred. 4.00 1.80 Operating Levels (of capacity) 659 75% 45,500 455,000 Standard Direct Labor Hours 70% 49,000 490,000 $ 1,820,000 882,000 $ 1,960,000 882,000 $ 2,702,000 $ 2,842,000 1. Compute the total variable overhead variance and identify it as favorable or unfavorable. (Indicate the effect of the variance by selecting favorable, unfavorable, or no variance.) 2. Compute the total fixed overhead variance and identify it as favorable or unfavorable. (Indicate the effect of the variance by selecting favorable, unfavorable, or no variance.) At 65% of Operating Capacity 52,500 525,000 $ 2,100,000 882,000 $ 2,982,000 Standard Actual Overhead Applied Overhead 943,000 Overhead Variance Favorable/Unfavorable
Required information [The following information applies to the questions displayed below.] Sedona Company set the following standard costs for one unit of its product for this year. Direct material (20 pounds @ $2.10 per pound) Direct labor (10 hours @ $8.80 per DLH) Variable overhead (10 hours @ $4.00 per DLH) Fixed overhead (10 hours @ $1.80 per DLH) Standard cost per unit The $5.80 ($4.00+ $1.80) total overhead rate per direct labor hour (DLH) is based on a predicted activity level of 49,000 units, which is 70% of the factory's capacity of 70,000 units per month. The following monthly flexible budget information is available. Flexible Budget Budgeted production (units) Budgeted direct labor (standard hours) Budgeted overhead. Variable overhead Fixed overhead. Total overhead. Actual variable overhead Actual fixed overhead. Actual total overhead. $ 1,765,000 943,000 $ 2,708,000 Standard Direct Labor Hours Overhead Rate Variable overhead variance Fixed overhead variance $ $ 42.00 88.00 40.00 18.00 $ 188.00 During the current month, the company operated at 65% of capacity, direct labor of 435,000 hours were used, and the following actual overhead costs were incurred. 4.00 1.80 Operating Levels (of capacity) 659 75% 45,500 455,000 Standard Direct Labor Hours 70% 49,000 490,000 $ 1,820,000 882,000 $ 1,960,000 882,000 $ 2,702,000 $ 2,842,000 1. Compute the total variable overhead variance and identify it as favorable or unfavorable. (Indicate the effect of the variance by selecting favorable, unfavorable, or no variance.) 2. Compute the total fixed overhead variance and identify it as favorable or unfavorable. (Indicate the effect of the variance by selecting favorable, unfavorable, or no variance.) At 65% of Operating Capacity 52,500 525,000 $ 2,100,000 882,000 $ 2,982,000 Standard Actual Overhead Applied Overhead 943,000 Overhead Variance Favorable/Unfavorable
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter2: Basic Cost Management Concepts
Section: Chapter Questions
Problem 21E: Ellerson Company provided the following information for the last calendar year: During the year,...
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![Required information
[The following information applies to the questions displayed below.]
Sedona Company set the following standard costs for one unit of its product for this year.
Direct material (20 pounds @ $2.10 per pound)
Direct labor (10 hours @ $8.80 per DLH)
Variable overhead (10 hours @ $4.00 per DLH)
Fixed overhead (10 hours @ $1.80 per DLH)
Standard cost per unit
The $5.80 ($4.00+ $1.80) total overhead rate per direct labor hour (DLH) is based on a predicted activity level of 49,000
units, which is 70% of the factory's capacity of 70,000 units per month. The following monthly flexible budget information
is available.
Flexible Budget
Budgeted production (units)
Budgeted direct labor (standard hours)
Budgeted overhead-
Variable overhead
Fixed overhead.
Total overhead.
Actual variable overhead
Actual fixed overhead.
Actual total overhead.
$ 1,765,000
943,000
$ 2,708,000
Standard Direct Labor Hours Overhead Rate
Variable overhead variance
Fixed overhead variance
$
$ 42.00
88.00
40.00
18.00
$ 188.00
During the current month, the company operated at 65% of capacity, direct labor of 435,000 hours were used, and the
following actual overhead costs were incurred.
4.00
1.80
Operating Levels (of capacity)
65%
75%
45,500
455,000
Standard
Direct Labor
Hours
70%
49,000
490,000
$1,820,000
882,000
$ 1,960,000
882,000
$ 2,702,000 $ 2,842,000
1. Compute the total variable overhead variance and identify it as favorable or unfavorable. (Indicate the effect of the variance by
selecting favorable, unfavorable, or no variance.)
2. Compute the total fixed overhead variance and identify it as favorable or unfavorable. (Indicate the effect of the variance by
selecting favorable, unfavorable, or no variance.)
At 65% of Operating Capacity
52,500
525,000
$ 2,100,000
882,000
$ 2,982,000
Standard
Actual
Overhead Applied Overhead
943,000
Overhead
Variance
Favorable/Unfavorable](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Feb774243-7844-4a51-b4aa-3ff5db343bed%2Fd5f4a6b2-1962-43a3-8d7d-ae2fecc57b1d%2F1qmifr_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Required information
[The following information applies to the questions displayed below.]
Sedona Company set the following standard costs for one unit of its product for this year.
Direct material (20 pounds @ $2.10 per pound)
Direct labor (10 hours @ $8.80 per DLH)
Variable overhead (10 hours @ $4.00 per DLH)
Fixed overhead (10 hours @ $1.80 per DLH)
Standard cost per unit
The $5.80 ($4.00+ $1.80) total overhead rate per direct labor hour (DLH) is based on a predicted activity level of 49,000
units, which is 70% of the factory's capacity of 70,000 units per month. The following monthly flexible budget information
is available.
Flexible Budget
Budgeted production (units)
Budgeted direct labor (standard hours)
Budgeted overhead-
Variable overhead
Fixed overhead.
Total overhead.
Actual variable overhead
Actual fixed overhead.
Actual total overhead.
$ 1,765,000
943,000
$ 2,708,000
Standard Direct Labor Hours Overhead Rate
Variable overhead variance
Fixed overhead variance
$
$ 42.00
88.00
40.00
18.00
$ 188.00
During the current month, the company operated at 65% of capacity, direct labor of 435,000 hours were used, and the
following actual overhead costs were incurred.
4.00
1.80
Operating Levels (of capacity)
65%
75%
45,500
455,000
Standard
Direct Labor
Hours
70%
49,000
490,000
$1,820,000
882,000
$ 1,960,000
882,000
$ 2,702,000 $ 2,842,000
1. Compute the total variable overhead variance and identify it as favorable or unfavorable. (Indicate the effect of the variance by
selecting favorable, unfavorable, or no variance.)
2. Compute the total fixed overhead variance and identify it as favorable or unfavorable. (Indicate the effect of the variance by
selecting favorable, unfavorable, or no variance.)
At 65% of Operating Capacity
52,500
525,000
$ 2,100,000
882,000
$ 2,982,000
Standard
Actual
Overhead Applied Overhead
943,000
Overhead
Variance
Favorable/Unfavorable
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