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# Weller Companys variable manufacturing overhead should be \$1 90 pe

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should be \$1.90 per standard machine-hour and its fixed
manufacturing overhead should be \$87,000 per month. The
following information is available for a recent month:
a. The denominator activity of 34,800 machine-hours was
chosen to compute the predetermined overhead rate.
b. At the 34,800 standard machine-hours level of activity,
the company should produce 12,000 units of product.
c. The companys actual operating results were as follows:
Number of units produced 12,930 Actual machine-hours
36,030
Actual variable manufacturing overhead cost \$ 72,060
Actual fixed manufacturing overhead cost \$ 85,300
Required:
1. Compute the predetermined overhead rate and break it
down into variable and fixed cost elements. (Round your
Predetermined overhead rate \$ per MH
Variable element \$ per MH
Fixed element \$ per MH
2. What were the standard hours allowed for the years
actual output? (Round your intermediate calculations to 2
decimal places.)
Standard hours MHs
3. Compute the variable overhead efficiency and rate
variances and the fixed overhead budget and volume
variances. (Leave no cells blank - be certain to enter \"0\"
wherever required. Input all amounts as positive values.
Indicate the effect of each variance by selecting \"F\" for
favorable, \"U\" for unfavorable, and \"None\" for no effect
(i.e., zero variance). Round your intermediate calculations
and final answers to 2 decimal places.)

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Volume variance \$
Solution
1. Compute the predetermined overhead rate and break it
down into variable and fixed cost elements. (Round your
Predetermined overhead rate \$ 4.40 per MH
Variable element \$1.90 per MH
Fixed element \$ 2.50 per MH
Working
Predetermined overhead rate = 1.90 + 87000/34800
Predetermined overhead rate = \$ 4.40 per machine hour
Variable element \$ 1.90 per MH (Given)
Fixed element = 87000/34800
Fixed element = \$ 2.50
2. What were the standard hours allowed for the years
actual output? (Round your intermediate calculations to 2
decimal places.)
Standard hours 37,497MHs

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