Exam 15: Predetermined Overhead Rates and Overhead Analysis in a Standard Costing System

Dori Castings is a job order shop that uses a standard cost system.Manufacturing overhead costs are applied on the basis of standard direct labor-hours.A volume variance will exist for Dori in a month where:

Cuda Manufacturing Corporation uses a standard cost system with machine-hours (MHs)as the activity base for overhead.The following information relates to Cuda's operations last year: What was Cuda's variable overhead rate variance?

Alex Corporation has a large underapplied overhead balance in the manufacturing overhead account.This could be explained by:

The Murray Corporation uses a standard cost system in which it applies manufacturing overhead on the basis of standard direct labor-hours (DLHs).The company recorded the following activity and cost data for May: The amount of fixed manufacturing overhead cost that was used to compute the fixed component of the predetermined overhead rate was:

In a standard costing system,if the actual fixed manufacturing overhead cost exceeds the budgeted fixed manufacturing overhead cost for the period,then fixed manufacturing overhead cost would be overapplied for the period.

At the beginning of last year,Tari Corporation budgeted $300,000 of fixed manufacturing overhead and chose a denominator level of activity of 600,000 machine-hours.At the end of the year,Tari's fixed manufacturing overhead budget variance was $9,000 favorable.Its fixed manufacturing overhead volume variance was $15,000 favorable.Actual direct labor-hours for the year were 625,000.What was Tari's total standard machine-hours allowed for last year's output?

Odonell Corporation estimates that its variable manufacturing overhead is $11.20 per machine-hour and its fixed manufacturing overhead is $563,640 per period. If the denominator level of activity is 6,000 machine-hours,the fixed component in the predetermined overhead rate would be:

Pohl Corporation uses a standard cost system in which manufacturing overhead is applied on the basis of standard machine-hours.For June,the company's manufacturing overhead flexible budget showed the following total budgeted costs at a denominator activity level of 20,000 machine-hours: During June,17,000 machine-hours were used to complete 13,000 units of product,and the following actual total overhead costs were incurred: At standard,each unit of finished product requires 1.4 hours of machine time. The fixed manufacturing overhead budget variance (in total)for June was:

Vette Tie Corporation has developed the following manufacturing overhead standards to use in applying overhead to the production of its hand-painted silk ties.Manufacturing overhead at Vette is applied to production on the basis of standard direct labor-hours (DLHs). The above standards were based on an expected annual volume of 60,000 ties.The actual results for last year were as follows: What was Vette's fixed manufacturing overhead budget variance?

Semaan Corporation applies manufacturing overhead to products on the basis of standard machine-hours.Budgeted and actual overhead costs for the month appear below: The company based its original budget on 2,700 machine-hours.The company actually worked 2,960 machine-hours during the month.The standard hours allowed for the actual output of the month totaled 3,030 machine-hours.What was the overall fixed manufacturing overhead budget variance for the month?

Bakos Corporation bases its predetermined overhead rate on variable manufacturing overhead cost of $8.80 per machine-hour and fixed manufacturing overhead cost of $100,688 per period.If the denominator level of activity is 2,800 machine-hours,the variable component in the predetermined overhead rate would be:

Nitrol Corporation manufactures brass vases using a standard cost system with standard machine-hours as the activity base for overhead.The following information relates to vase production at Nitrol for last year: The standard machine-hours per vase is 1.25.Last year Nitrol produced 84,000 vases. What was Nitrol's fixed manufacturing overhead volume variance for last year?

Cajun Corporation manufactures a labor-intensive product.The cost standards developed by Cajun appear below.Manufacturing overhead at Cajun is applied to production on the basis of standard direct labor-hours: The standards above were based on an expected annual volume of 8,000 units.The actual results for last year were as follows: Required: Compute the following variances for Cajun. a.Materials price variance. b.Materials quantity variance. c.Labor rate variance. d.Variable overhead rate variance. e.Variable overhead efficiency variance. f.Fixed overhead budget variance.

The Dillon Corporation makes and sells a single product.Overhead costs are applied on the basis of standard direct labor-hours.The standard cost card shows that 5 direct labor-hours are required per unit.The Dillon Corporation had the following budgeted and actual data for March: The fixed manufacturing overhead budget variance for March is:

Nova Corporation produces a single product and uses a standard cost system to help control costs.Overhead is applied to production on the basis of standard machine-hours.According to the company's flexible budget,the following overhead costs should be incurred at an activity level of 18,000 machine-hours (the denominator activity level chosen for the current year): During the current year,the following operating results were recorded: At the end of the year,the company's Manufacturing Overhead account showed total debits for actual overhead costs of $145,100 and total credits of $136,000 for overhead applied.The difference ($9,100)represents under-applied overhead,the cause of which management would like to know. Required: a.Compute the predetermined overhead rate that would have been used during the year,showing separately the variable and fixed components of the rate. b.Show how the $136,000 of overhead actually applied was computed. c.Analyze the $9,100 under-applied overhead figure in terms of the variable overhead rate and efficiency variances and the fixed manufacturing overhead budget and volume variances.

Cuda Manufacturing Corporation uses a standard cost system with machine-hours (MHs)as the activity base for overhead.The following information relates to Cuda's operations last year: What was Cuda's fixed manufacturing overhead budget variance?

A manufacturing company uses a standard costing system in which standard machine-hours (MHs)is the measure of activity.Data from the company's flexible budget for manufacturing overhead are given below: The following data pertain to operations for the most recent period: The fixed manufacturing overhead volume variance for the period is closest to:

If all four of Argo Corporation's overhead variances are favorable,Argo's overhead will be underapplied.

The Santos Corporation made an error when selecting a denominator level of activity and chose a much lower level than was realistic.This error would most likely result in a large:

Faessler Corporation applies overhead to products based on machine-hours.The denominator level of activity is 6,500 machine-hours.The budgeted fixed manufacturing overhead costs are $242,450.In July,the actual fixed manufacturing overhead costs were $242,490 and the standard machine-hours allowed for the actual output were 7,000 machine-hours. Required: a.Compute the budget variance for July.Show your work! b.Compute the volume variance for July.Show your work!