Manufacturing Overhead Variances
Response to the following problem:
Rollins Manufacturing Company estimates variable manufacturing overhead for the month of November to be $80,000. Fixed manufacturing overhead is estimated to be $195,000. All manufacturing overhead is estimated on the basis of 10,000 budgeted direct labor hours. At standard production output capacity, each unit of finished product requires two direct labor hours to complete. During November, 5,900 units of finished product were produced. Actual variable and fixed manufacturing overhead costs incurred were $81,500 and $189,000, respectively. Actual direct labor hours during the month were 12,000.
1. Compute the total amount of manufacturing overhead applied during November.
2. Compute the amount of under- or overapplied overhead for the month.
3. Compute the variable manufacturing overhead spending and efficiency variances.
4. Compute the fixed manufacturing budget and volume variances.