Cost Management: A Strategic Emphasis 7th Edition by Edward Blocher,David Stout ,Paul Juras,Gary Cokins

Exercise 51

Fixed Overhead Rate; Denominator Level; Two-Variance Analysis Overhead information for Cran-Mar Company for October follows:

Required
1. What is the standard fixed factory overhead rate per machine hour
2. What is the denominator activity level that was used to establish the fixed overhead application rate
3. Prepare a diagram such as the one in Exhibit 15.7, Panel 3, to calculate the following overhead variances for October
a. Total flexible-budget variance for factory overhead.
b. Fixed overhead production volume variance.
c. Total factory overhead cost variance.
EXHIBIT 15.7 Schmidt Machinery Company, Overhead Variance Analyses, October 2016