Bluecap Co. uses a standard cost system and flexible budgets for control purposes. The following budgeted information pertains t
o 2019:
Denominator volume-number of units 8,000
Denominator volume-percent of capacity 80%
Denominator volume-standard direct labor hours 24,000
Budgeted variable factory overhead cost at the denominator volume $103,200
Total standard factory overhead rate per direct labor hour $15.10
During 2019, Bluecap worked 28,000 direct labor hours and manufactured 9,600 units. The actual factory overhead was $14,000 greater than the flexible budget amount for the units produced, of which $6,000 was due to fixed factory overhead. In preparing a budget for 2020 Jensen decided to raise the level of operation to 90% of capacity, to manufacture 9,000 units at a budgeted total of 27,000 direct labor hours.
a. Compute variable overhead variances for 2019:
b. Compute fixed overhead variances for 2019:
c. Under the assumption that the total budgeted fixed overhead for 2020 is the same as it was for 2019, what is the standard fixed overhead application rate per direct labor hour for Bluecap Co. for 2019?
d. Must be done in excel and show all work.
Denominator volume-number of units 8,000
Denominator volume-percent of capacity 80%
Denominator volume-standard direct labor hours 24,000
Budgeted variable factory overhead cost at the denominator volume $103,200
Total standard factory overhead rate per direct labor hour $15.10
During 2019, Bluecap worked 28,000 direct labor hours and manufactured 9,600 units. The actual factory overhead was $14,000 greater than the flexible budget amount for the units produced, of which $6,000 was due to fixed factory overhead. In preparing a budget for 2020 Jensen decided to raise the level of operation to 90% of capacity, to manufacture 9,000 units at a budgeted total of 27,000 direct labor hours.
a. Compute variable overhead variances for 2019:
b. Compute fixed overhead variances for 2019:
c. Under the assumption that the total budgeted fixed overhead for 2020 is the same as it was for 2019, what is the standard fixed overhead application rate per direct labor hour for Bluecap Co. for 2019?
d. Must be done in excel and show all work.
1 answer:
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Answer:
Quantity discounts can be taken advantage of for large lot sizes.
Explanation:
The EOQ model assumptions:
the order of one item does not intervene with the other.
The order will arrive without delay and with a specific amount of goods.
no losses or damage in transit
The EOQ does not consider the discount for large lot size, their formula does not consider the value of the goods:
Its use: Demand of the good
cost of Setup, or ordering cost.
and Holding cost, the cost of keeping the inventory
There is no variable to account for discounts for order size in this method