Managerial Accounting
17th Edition
ISBN: 9781260247787
Author: Ray H. Garrison, Eric W. Noreen, Peter C. Brewer
Publisher: RENT MCG
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Chapter 10.A, Problem 9P
PROBLEM 10A-9 Applying
Chdczuk, S.A, of Gdansk Poland, is a major producer of classic Polish sausage. The company uses a
Management would like to determine the cause of the $ 15,400 underapplied overhead.
- Compute the predetermined overhead rate. Break the rate down into variable and fixed cost elements.
- Show how the $272,000 Applied figure in the Manufacturing Overhead account was computed.
- Breakdown the $15,400 underapplied overhead into four components: (1) variable overhead rate variance, (2) variable overhead efficiency variance, (3) fixed overhead
budget variance , and (4) fixed overhead volume variance. - Explain the meaning of each variance that you computed in (3) above.
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Example-2Variable manufacturing overhead variance analysis. The Sourdough Bread Company bakes baguettes for distribution to upscale grocery stores. The company has two direct-cost categories:
direct materials and direct manufacturing labor. Variable manufacturing overhead is allocated to products on the basis of standard direct manufacturing labor-hours. Following is some budget data for the Sourdough Bread Company:Direct manufacturing labor use 0.02 hours per baguetteVariable manufacturing overhead $10.00 per direct manufacturing labor-hourThe Sourdough Bread Company provides the following additional data for the year ended December 31, 2017:Required:Planned (budgeted) outputActual productionDirect manufacturing laborActual variable manufacturing overhead3,100,000 baguettes 2,600,000 baguettes 46,800 hours$617,7601. What is the denominator level used for allocating variable manufacturing overhead? (That is, for how many direct manufacturing labor-hours is Sourdough Bread budgeting?)2.…
3. Fixed manufacturing overhead variance analysis (Continuation of #2 above)
The Sourdough Bread Company bakes baquettes for distribution to upscale grocery stores. The
company has two direct-cost categories: direct materials and direct manufacturing labor.
Variable manufacturing overhead is allocated to products on the basis of standard direct
manufacturing labor-hours. Following is some budget data for the Sourdough
Bread Company:
Direct manufacturing labor use
Variable manufacturing overhead $10.00 per direct manufacturing labor-hour
0.02 hours per baguette
The Sourdough Bread Company also allocates fixed manufacturing overhead to products on the
basis of standard direct manufacturing labor-hours. For 2021, fixed manufacturing overhead was
budgeted at $3.00 per direct manufacturing labor-hour. Actual fixed manufacturing overhead
incurred during the year was $284,000.
The Sourdough Bread Company provides the following additional data for the
December 31, 2021:
year ended
Planned…
Problem 4. NEW JERSEY CORP. uses a standard cost system in which manufacturing overhead
is applied to units of product on the basis of direct labor-hours. The company's total budgeted
variable and fixed manufacturing overhead costs at the denominator level of activity are P20,000
for variable overhead and P30,000 for fixed overhead. The predetemined overhead rate, including
both fixed and variable components, is P2.50 per direct labor-hour. The standards call for two
direct labor-hours per unit of output produced. Last year, the company produced 11,500 units of
product and worked 22,000 direct labor-hours. Actual costs were P22,500 for variable overhead and
P31,000 for fixed overhead.
(d) What was the variable overhead efficiency variance?
(e) What was the fixed overhead budget variance?
What was the fixed overhead volume variance?
(f)
Chapter 10 Solutions
Managerial Accounting
Ch. 10.A - EXERCISE 10A-1 Fixed Overhead Variances LO10-4...Ch. 10.A - EXERCISE 10A-2 Predetermined Overhead Rate;...Ch. 10.A - Prob. 3ECh. 10.A - EXERCISE 10A-4 Fixed Overhead Variances LO10-4...Ch. 10.A - EXERCISE 10A5 Using Fixed Overhead Variances LO104...Ch. 10.A - EXERCISE 10A-6 Predetermined Overhead Rate LO10-4...Ch. 10.A - EXERCISE 10A-7 Relations Among Fixed Overhead...Ch. 10.A - Prob. 8PCh. 10.A - PROBLEM 10A-9 Applying Overhead; Overhead...Ch. 10.A - PROBLEM 10A-10 Comprehensive Standard Cost...
Ch. 10.A -
PROBLEM 10A-11 Comprehensive Standard Cost...Ch. 10.A - Prob. 12PCh. 10.B - EXERCISE 10B-1 Standard Cost Flows; Income...Ch. 10.B - Prob. 2ECh. 10.B - Prob. 3ECh. 10.B - Prob. 4ECh. 10.B - Prob. 5PCh. 10.B - Prob. 6PCh. 10 - Prob. 1QCh. 10 - Why are separate price and quantity variances...Ch. 10 - 10-3 Who is generally responsible for the...Ch. 10 - The materials price variance can be computed at...Ch. 10 - 10-5 If the materials price variance is favorable...Ch. 10 - Prob. 6QCh. 10 - Prob. 7QCh. 10 - 10-8 What effect, if any, would you expect...Ch. 10 - 10-9 If variable manufacturing overhead is applied...Ch. 10 - 10-10 Why can undue emphasis on labor efficiency...Ch. 10 -
The Excel worksheet form that appears below is to...Ch. 10 - Prob. 2AECh. 10 - Prob. 1F15Ch. 10 - Prob. 2F15Ch. 10 - Prob. 3F15Ch. 10 - Prob. 4F15Ch. 10 - Prob. 5F15Ch. 10 - Prob. 6F15Ch. 10 - Prob. 7F15Ch. 10 - Prob. 8F15Ch. 10 - Prob. 9F15Ch. 10 - Preble Company manufactures one product. Its...Ch. 10 - Prob. 11F15Ch. 10 - Prob. 12F15Ch. 10 - Prob. 13F15Ch. 10 - Prob. 14F15Ch. 10 - Prob. 15F15Ch. 10 - EXERCISE 10-1 Direct Materials Variances LO10-1...Ch. 10 -
EXERCISE 10-2 Direct Labor Variances...Ch. 10 -
EXERCISE 10–3 Variable Overhead Variances...Ch. 10 - EXERCISE 10-4 Direct Labor and Variable...Ch. 10 -
EXERCISE 10-5 Working Backwards from Labor...Ch. 10 - EXERCISE 10-6 Direct Materials and Direct Labor...Ch. 10 - EXERCISE 10-7 Direct Materials Variances LOIO-1...Ch. 10 -
EXERCISE 10-8 Direct Materials and Direct Labor...Ch. 10 -
PROBLEM 10-9 Comprehensive Variance Analysis...Ch. 10 -
PROBLEM 10-10 Multiple Products, Materials, and...Ch. 10 - PROBLEM 10-11 Direct Materials and Direct Labor...Ch. 10 - PROBLEM 10-12 Variance Analysis in a...Ch. 10 - Prob. 13PCh. 10 - Prob. 14PCh. 10 - PROBLEM 10-15 Comprehensive Variance Analysis...Ch. 10 - Prob. 16PCh. 10 - Prob. 17C
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- Exercise 3 (Labor and Variable Overhead Variances) Halliwell Audio, Inc., manufactures military-specification compact discs. The company uses standards to control its costs. The labor standards that have been set for one disc are as follows: Standard Hours Standard Cost P2.40 Standard Rate per Hour 24 minutes P6.00 During July, 8,500 hours of direct labor time were recorded to make 20,000 discs. The direct labor cost totaled P49,300 for the month. Required: 1. What direct labor cost should have been incurred to make the 20,000 discs? By how much does this differ from the cost that was incurred? 2. Break down the difference in cost from (1) above into a labor rate variance and a labor efficiency variance. 3. The budgeted variable manufacturing overhead rate is P4 per direct labor-hour. During July, the company incurred P39,100 in variable manufacturing overhead cost. Compute the variable overhead spending and efficiency variances for the month.arrow_forwardRequired information [The following information applies to the questions displayed below.] Preble Company manufactures one product. Its variable manufacturing overhead is applied to production based on direct labor-hours and its standard cost card per unit is as follows: Direct materials: 4 pounds at $10 per pound Direct labor: 2 hours at $16 per hour Variable overhead: 2 hours at $6 per hour $ 40 32 12 Total standard cost per unit $ 84 The planning budget for March was based on producing and selling 30,000 units. However, during March the company actually produced and sold 34,500 units and incurred the following costs: a. Purchased 150,000 pounds of raw materials at a cost of $9.20 per pound. All of this material was used in production. b. Direct laborers worked 62,000 hours at a rate of $17 per hour. c. Total variable manufacturing overhead for the month was $390,600. 2. What raw materials cost would be included in the company's flexible budget for March? Raw material costarrow_forwardRequired information [The following information applies to the questions displayed below.] Preble Company manufactures one product. Its variable manufacturing overhead is applied to production based on direct labor-hours and its standard cost card per unit is as follows: Direct materials: 4 pounds at $10 per pound Direct labor: 2 hours at $16 per hour Variable overhead: 2 hours at $6 per hour $ 40 32 12 Total standard cost per unit $ 84 The planning budget for March was based on producing and selling 30,000 units. However, during March the company actually produced and sold 34,500 units and incurred the following costs: a. Purchased 150,000 pounds of raw materials at a cost of $9.20 per pound. All of this material was used in production. b. Direct laborers worked 62,000 hours at a rate of $17 per hour. c. Total variable manufacturing overhead for the month was $390,600. 11. What is the labor spending variance for March? (Indicate the effect of each variance by selecting "F" for…arrow_forward
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