Before the year began, Milkway Manufacturing estimated that manufacturing overhead for the year would be $175,000 and that 25,00
1 answer:
Answer:
Manufacturing overheads allocated based on hourly rate = $140,000
Explanation:
As for the information provided, the following is available,
Standard or budgeted manufacturing overhead = $175,000 based on working of 25,000 labor hours.
That means budgeted rate for the activity = $175,000/25,000 = $7 per hour.
Provided actual overheads = $182,000 for 20,000 hours.
Had the overheads been charged based on standard basis of hourly rate, overheads would be = 20,000 $7 = $140,000
As with this it means actual overheads are over absorbed, by $182,000 - $140,000 = $42,000
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Answer:
The effect that will happen on the net income is an increase in $6,000.
Explanation:
For this product, we have:
Price: $90.
Variable cost: $28
Allocated fixed cost: $18
There is an opportunity to sell 3,000 units at $30, and the firm has excess capacity.
As the allocated fixed cost only counts for the existing level of production (before accepting the 3,000 additional units), they don't matter in the decision.
With excess capacity, the firm only incurs in the variable cost of $28 per unit. If the price is $30, the variation in the net income will be:
The effect that will happen on the net income is an increase in $6,000.