Costs Budget Budget Incurred Based on Based on (per 42,120 42,120 41,580 Indirect labor $5.90 $268,306 $248,508 $245,322 Power 1.00 41,922 42,120 41,580 Total $6.90 $310,228 $290,628 $286,902 Total Spending Efficiency Variance Variance Variance Variable overhead costs: (1) (3) (1) (2) (2) (3) − − − Indirect $22,984 U $19,798 U $3,186 U Power 342 U 198 F 540 U Total $23,326 U $19,600 U $3,726 U 153. Creger Corporation, which makes landing gears, has provided the following data for a recent month: Budgeted production 7,900 gears Standard per gear 9.3 machine-hours Budgeted supplies cost $6.20 per machine-hour Actual production 8,300 gears Actual 76,930 machine-hours Actual supplies cost (total) $479,438 Required: Determine the total variance, the spending variance, and the efficiency variance for the variable overhead item supplies cost that would appear on the company's variable overhead performance report. Show your work! Ans: Budgeted machine-hours (9.3 × 7,900) 73,470 Actual machine-hours 76,930 Standard machine-hours allowed for the actual output (9.3 × 8,300) 77,190 (1) (2) (3) Actual Flexible Flexible Cost Costs Budget Budget Formula Incurred Based on Based on (per 76,930 76,930 77,190 Variable overhead costs: Supplies cost $6.20 $479,438 $476,966 $478,578
(per Costs Incurred 42,120 Budget Based on 42,120 Budget Based on 41,580 Indirect labor $5.90 $268,306 $248,508 $245,322 Power 1.00 41,922 42,120 41,580 Total $6.90 $310,228 $290,628 $286,902 Variable overhead costs: Total Variance (1) − (3) Spending Variance (1) − (2) Efficiency Variance (2) − (3) Indirect $22,984 U $19,798 U $3,186 U Power 342 U 198 F 540 U Total $23,326 U $19,600 U $3,726 U 153. Creger Corporation, which makes landing gears, has provided the following data for a recent month: Budgeted production 7,900 gears Standard per gear 9.3 machine-hours Budgeted supplies cost $6.20 per machine-hour Actual production 8,300 gears Actual 76,930 machine-hours Actual supplies cost (total) $479,438 Required: Determine the total variance, the spending variance, and the efficiency variance for the variable overhead item supplies cost that would appear on the company's variable overhead performance report. Show your work! Ans: Budgeted machine-hours (9.3 × 7,900) 73,470 Actual machine-hours 76,930 Standard machine-hours allowed for the actual output (9.3 × 8,300) 77,190 Variable overhead costs: Cost Formula (per (1) Actual Costs Incurred 76,930 (2) Flexible Budget Based on 76,930 (3) Flexible Budget Based on 77,190 Supplies cost $6.20 $479,438 $476,966 $478,578
Ch11%20Flexible%20Budgets%20and%20Overhead%20Analysis.docx