Assignment:
Predetermined Overhead Rate, Overhead Variances
Weller Company's variable manufacturing overhead should be $1.05 per standard machine-hour and its fixed manufacturing overhead should be $24,800 per month. The following information is available for a recent month:
- The denominator activity of 8,000 machine-hours was chosen to compute the predetermined overhead rate.
- At the 8,000 standard machine-hours level of activity, the company should produce 3,200 units of product.
The company's actual operating result were as follows:
|
Number of units produced
|
3,500
|
|
Actual machine-hours
|
8,500
|
|
Actual variable manufacturing overhead cost
|
$9,860
|
|
Actual fixed manufacturing overhead cost
|
$25,100
|
Answer:
- Compute the predetermined overhead rate and break it down into variable and fixed cost elements.
- What were the standard hours allowed for the year's actual output?
- Compute the variable overhead rate and efficiency variances and the fixed overhead budget and volume variances.