Essay
The cost functions are considered reliable within a relevant range of 25,000 to 50,000 direct labor hours per month. The company expects to operate at 30,000 hours per month.
Actual results for February are as follows:
McIntire Inc. developed the following monthly cost functions for manufacturing overhead:
Required:
(1) What are the following standard manufacturing overhead rates based on expected activity?
(a) Variable manufacturing overhead
(b) Fixed manufacturing overhead
(2) (a) Prepare a flexible budget using the following headings: Budget at
Overhead Cost VC/DLH Actual cost actual hrs. Variance
(b) Which variances need to be investigated and what are some probable causes?
Correct Answer:
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(1)(a) Variable overhead rate = $1.85 (....View Answer
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