Budgeted 3,600 Actual machine-hours: 3,900 Standard machine-hours allowed: 3,890 (1) Budget Based on (2) Cost 3,900 Budget Formula MHs Based on (1) (2) − (per (AH × 3,890 MHs Efficiency MH) SR) (SH × SR) Variance Overhead Costs Variable overhead costs: Supplies $ 3.10 $12,090 * $12,059 $ 31 U Indirect labor 7.30 28,470 ** $28,397 73 U $10.40 $40,560 $104 U *3,900 machine-hours × $3.10 per machine-hour = $12,090 **3,900 machine-hours × $7.30 per machine-hour = $28,470 45. Mongar Corporation applies manufacturing overhead to products on the basis of standard machine-hours. Budgeted and actual overhead costs for the most recent month appear below: Original Budget Actual Costs Variable overhead costs: Supplies $ 7,980 $ 8,230 Indirect labor 29,820 29,610 Total variable overhead cost $37,800 $37,840 The original budget was based on 4,200 machine-hours. The company actually worked 4,350 machine-hours during the month and the standard hours allowed for the actual output were 4,190 machine-hours. What was the overall variable overhead efficiency variance for the month? A) $130 unfavorable B) $950 favorable C) $1,310 favorable D) $1,440 unfavorable Ans: D Solution: Variable Per overhead costs hour Supplies $7,980 4,200 $1.90 Indirect labor $29,820 4,200 $7.10
Budgeted 3,600 Actual machine-hours: 3,900 Standard machine-hours allowed: 3,890 Cost Formula (per MH) (1) Budget Based on 3,900 MHs (AH × SR) (2) Budget Based on 3,890 MHs (SH × SR) (1) − (2) Efficiency Variance Overhead Costs Variable overhead costs: Supplies $ 3.10 $12,090 * $12,059 $ 31 U Indirect labor 7.30 28,470 ** $28,397 73 U $10.40 $40,560 $104 U *3,900 machine-hours × $3.10 per machine-hour = $12,090 **3,900 machine-hours × $7.30 per machine-hour = $28,470 45. Mongar Corporation applies manufacturing overhead to products on the basis of standard machine-hours. Budgeted and actual overhead costs for the most recent month appear below: Original Budget Actual Costs Variable overhead costs: Supplies $ 7,980 $ 8,230 Indirect labor 29,820 29,610 Total variable overhead cost $37,800 $37,840 The original budget was based on 4,200 machine-hours. The company actually worked 4,350 machine-hours during the month and the standard hours allowed for the actual output were 4,190 machine-hours. What was the overall variable overhead efficiency variance for the month? A) $130 unfavorable B) $950 favorable C) $1,310 favorable D) $1,440 unfavorable Ans: D Solution: Variable overhead costs Per Supplies $7,980 4,200 $1.90 Indirect labor $29,820 4,200 $7.10 hour
Ch11%20Flexible%20Budgets%20and%20Overhead%20Analysis.docx