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dolphi86 [110]
3 years ago
11

Overhead Variances, Four-Variance Analysis Oerstman, Inc., uses a standard costing system and develops its overhead rates from t

he current annual budget. The budget is based on an expected annual output of 124,000 units requiring 496,000 direct labor hours. (Practical capacity is 516,000 hours.) Annual budgeted overhead costs total $813,440, of which $585,280 is fixed overhead. A total of 119,300 units using 494,000 direct labor hours were produced during the year. Actual variable overhead costs for the year were $260,700, and actual fixed overhead costs were $555,750. Required: 1. Compute the fixed overhead spending and volume variances. Fixed Overhead Spending Variance $ Fixed Overhead Volume Variance $ 2. Compute the variable overhead spending and efficiency variances. Do not round intermediate calculations Variable Overhead Spending Variance $ 33,460 Unfavorable Variable Overhead Efficiency Variance $ 884 Unfavorable
Business
1 answer:
son4ous [18]3 years ago
4 0

Answer:

Explanation:

1).

Fixed overhead rate = Budgeted fixed overhead / Budgeted direct labor hours = $585,280 / 496000 = $1.18 per hour

Standard hour per unit = 496000 / 124000 = 4 hours per unit

Standard hours for actual production = 119300 * 4 = 477200 hours

Budgeted fixed overhead = $585,280

Actual fixed overhead = $555,750

Fixed overhead applied = SH * Standard rate of fixed overhead = 477200 * $1.18 = $563,096

Fixed overhead spending variance = Budgeted fixed overhead - Actual fixed overhead

= $585,280 - $555,750 = $29,530 F

Fixed overhead volume variance = Fixed overhead applied - Budgeted fixed overhead

= $563,096  - $585,280 = $22,184 U

2).

Standard rate of variable overhead = ($813,440 - $585,280) / 496000 = $0.46 per hour

Actual rate of variable overhead = $260,700 / 494000 = $0.5277327935 per hour

Variable overhead spending variance = (SR - AR) * AH = ($0.46 - $0.5277327935) * 494000 = $33,460 U

Variable overhead efficiency variance = (SH - AH) * SR = (477200 - 494000) * $0.46 = $7,728 U

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Answer:

Rent of the building will remain the same

Explanation:

The fixed costs will not change because fixed cost remains fixed for any level of activity whereas the variable cost changes with the increase in level of activity. As the activity level will change with additional hours work which will increase the variable costs only. So all variable costs will increase whereas fixed will remain fixed. The all the other options were variable costs except rent which is fixed cost. So rent will no change because of additional hours worked.

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3 years ago
The __________ is a market derived interest rate used to discount the future cash flows of the bond. ashworth college
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7 0
2 years ago
Short-term bank loans (Select all that apply.) usually have a lower interest rate than long-term debt. usually have a higher int
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Answer:

A. usually have a lower interest rate than long-term debt.

D. are frequently used by large corporations as a significant component of capital structure.

Explanation:

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Basically, when a small business owner (entrepreneur) or start-up needs to finance a temporal personal or working capital requirements but isn't eligible to apply for a line of credit from a bank; he or she can obtain a short-term bank loan.

Short-term bank loans usually have a lower interest rate than long-term debt and are frequently used by large corporations as a significant component of capital structure.

6 0
2 years ago
Amex Corporation invests excess cash to purchase $25,000 in corporate bonds on March 30, 2018. In addition to the $25,000, Amex
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Answer:

b. a debit to Held-to-Maturity Debt Investments for $26,000

Explanation:

Investment in corporate bonds is considered as Held-to-Maturity Debt investments.

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                   [$25,000 + $1,000)

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Therefore, in the journal entry, it is debited to Held-to-Maturity Debt investments for $26,000

7 0
3 years ago
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Answer:

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5 0
3 years ago
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