Home / Questions / EXERCISE 10A 6 Predetermined Overhead Rate; Overhead Variances LO3 LO4 Weller Company’s v...
EXERCISE 10A–6 Predetermined Overhead Rate; Overhead Variances [LO3, LO4]
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:
a. The denominator activity of 8,000 machine-hours was chosen to compute the predetermined overhead rate.
b. At the 8,000 standard machine-hours level of activity, the company should produce 3,200 units of product.
c. The company’s actual operating results 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 |
Required:
1. Compute the predetermined overhead rate and break it down into variable and fixed cost elements.
2. What were the standard hours allowed for the year’s actual output?
3. Compute the variable overhead rate and efficiency variances and the fixed overhead budget and volume variances.
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